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Brexit EU VAT & customs Practical options for UK merchants
DCA members are asking how to best deal with shipping to EU customers – here are some thoughts
U
K D2C merchants face fairly complex choices on how to
deal with taxes and customs duties if they wish to retain their EU consumer sales. With the consumer press warning UK consumers of the likely additional charges they face when buying from EU merchants, the same is happening in EU country media, warning of increased costs being applied to their purchases.
When it comes to the country of origin and its relat ionship with duty, this becomes slightly more complex as the definition of the country of origin can be a conundrum. e.g. if goods are imported and then changed/added to they can then be classed as being of UK origin in some circumstances. But essent ially if goods originate outside of the UK and are then sold into the EU then the relevant duty for that product becomes payable on goods above a sales & shipping value of more than 150 euros. There may also import tax/duty payable on those goods when they arrive within the UK. Again any reclaim process would be driven by the fiscal ent it ies set up for a part icular company.. Jeremy Parnham, MH-International
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Not that any of this is brand new or unexpected. The warning bells sounded when Amazon issued its edict last year which demanded that UK merchants wishing to continue to use its platform would need to have a separate stock holding in the EU for EU orders to be fulfilled from. Some larger organisations already have distribution centres in mainland Europe used to supply their physical stores in EU countries and for these, the new modus operandi is relatively straightforward. But for those without those resources, a new world of customs declarations awaits and is proving to be a minefield. EU customers, like their UK counterparts, are unwilling to pay extra for the goods they have ordered and a most complex saga of refused deliveries and returns issues is further compounding the problems.
So what do you do?
Whilst some retailers have called a complete halt to servicing EU customers, to lose that revenue stream following years of marketing and tech investment for EU markets would be near- suicidal for many merchants.
Options to carry on supplying EU customers are:
A: To make it completely transparent on your website that customers in EU countries buying from you will be treated as the importer of the goods and will, therefore, be liable for payment of the import VAT. This will be collected by the delivery company at the point of delivery.
This is simple for the merchant but the risk is that you will lose most if not all of your EU customers who will not be at all happy to pay the additional charge.
B: You cover clearance of the goods into the EU at sale
To do this you will need to register for VAT in the EU countries of your customers. You will then pay the import VAT to clear the goods. You then charge for the goods with the local VAT rate applied. It means you will have to account for VAT in each of the country’s VAT
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