At Whistl, the UK’s leading delivery management company, we help retailers and brands ship internationally. In this article, we cover UK businesses’ current delivery duty and VAT obligations when sending items into the EU. We explain how to maximise your cross-border e-commerce sales, to consumers based in the European Union.
What is the current state of the UK’s and EU’s trading relationship?
Since leaving the EU, the UK has had to forge new trading alliances with its member states, one by one. The UK’s departure has also resulted in disrupted deliveries, delayed parcels, a requirement for more paperwork and detailed product descriptions. In some instances, businesses require fiscal representation in the EU and some UK businesses are no longer able to profitably trade in the EU.
While the UK has been given greater control, this meant that the UK no longer had a simple free trade agreement with the European Union.
Changes that came into play from 1st July 2021 meant all commercial goods imported to the EU are subject to VAT, regardless of value.
This means that on all purchases from your EU-based customers, you will need to:
- Collect VAT at the checkout, depending on which country your customers are based in, your product's country of manufacture, and item value
- Declare VAT for customs clearance
- Submit VAT returns
This all sounds daunting, but thankfully the European Commission has worked with the UK Government to create the Import One-Stop-Shop (IOSS), an electronic portal businesses can use to comply with their VAT obligations for the sale of goods to EU consumers. To save you from having to create trade relationships with 27 different EU member states, IOSS gives you a single VAT ID number to cover all of these countries.
What is IOSS?
The Import One-Stop-Shop (IOSS) was created to facilitate and simplify the declaration and payment of VAT for distance sales of imported goods with a value not exceeding EUR 150.
- IOSS facilitates the collection, declaration, and payment of VAT for sellers that are making distant sales of imported goods to buyers in the EU.
- IOSS also makes the process easier for the buyer, who is only charged at the time of purchase, and therefore does not face any surprise fees when the goods are delivered.
- If the seller is not IOSS-registered, the buyer has to pay the VAT and usually a customs clearance fee charged by the transporter at the moment the goods are imported into the EU.
What are the options for sending goods into Europe, with Whistl
For eCommerce sellers, it is important to still reach your customers in Europe. To help navigate the complexities of UK to Europe shipping, we have outlined a summary to help you understand which option is best suited to your business and parcel delivery volumes:
Selling via a marketplace
If you sell goods through a marketplace (i.e. eBay or Amazon as an example), they will have registered for IOSS directly. To remain compliant with all goods sold through this sales channel, you, 'the seller' will be required to capture the marketplace-registered IOSS number, within your shipping data.
The Import One Stop Shop (IOSS)
Self-register for IOSS or use one of our 'assisted IOSS' solutions, outlined above. This will allow you to calculate and collect VAT from your customers at the point of check out and pay it directly to the EU.
Delivery Duties Unpaid (DDU)
UK sellers do not ask their customers for taxes. The European customer is then contacted in-country and pays all owed taxes before they can receive the purchased goods. This service is also relevant for high-value goods >€150.
What are the risks around shipping DDU into the EU?
Shipping DDU means the consumer bears full responsibility for paying duty to receive their goods if the duty is liable for payment. While their checkout and shipping process will be smooth, the post-buy-button experience will not. This is because they may incur unexpected charges such as duty and administration costs. Not asking your EU-based customers to pay for import duty upfront can also lead to longer delivery times and increase the likelihood of deliveries failing.
How Whistl can help you increase your cross-border sales to the European Union
Whistl has collaborated with Deloitte and Taxamo to offer our ‘assisted’ IOSS solutions, to help businesses continue to ship goods into Europe.
- Deloitte - perfect for regular eCommerce orders:
Deloitte can set up, register you for IOSS, prepare and submit your monthly IOSS VAT returns, dealing with all queries that arise along the way.
Taxamo provides a simple 'pay-as-you-go' option:
Taxamo becomes the VAT ‘deemed reseller’ when it facilitates through its electronic interface the sale of your goods valued at up to €150 to consumers located in the EU.
At Whistl we provide a range of services for cross-border shipping, empowering online retailers with easier and faster passage through UK-to-EU customs processes.
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