Below is my original blog on sales less than £15 and how these could be VAT free post BREXIT.
This relied on the assumption that the £15 / EUR 22 VAT free limit would stay.Today the EU Commission, as part of eCommerce VAT changes are looking to remove this VAT free limit. In addition, it looks like extra checks to ensure VAT compliance on all incoming parcels to the EU.
For UK eCommerce traders this cannot be good news as all BREXIT models mean we are outside of the EU VAT scheme. This will add delays, mean poorer customer service and mean UK businesses are dependent on EU customs officials.
The new process will be:
These are still proposals so the impact will be dependent on timing, if they are implemented pre-BREXIT or not.
- EU consumer orders goods from the UK.
- The consumer is not charged VAT
- On arrival in EU, the parcel is processed and consumer asked to pay VAT
- Only on payment of VAT does the consumer get the goods.
- If they want a return, they have to get proof of postage and get the VAT and purchase amount processed separately.
Like all things, businesses and consumers have a choice, why would any consumer have to deal with paying the VAT separately when ordering from the UK, when they don't have to when ordering from anywhere in the EU?
The answer is they won't and businesses know that. Most eCommerce sales are a secondary movement, i.e. the product has first been moved from China/Turkey/India etc to the UK and then moved onward to the consumer. So for most businesses, a simple solution is to just import and then onward deliver, the item from within the EU, cutting out that EU-UK red-tape.
Adding Big Government to your eCommerce / mCommerce UK based business
All post-BREXIT models mean the UK will no longer be part of EU VAT.
Allen&Overy "Following Brexit, the UK would sit outside of the territorial scope of EU VAT."
Plus VAT is not charged by HMRC on goods £15 or less on importation of those parcels.
HMRC Goods sent from abroad.
Play.com established in 1998 in Jersey. The UK Government reduce the tax-free limit from £18 to £15 but the tax loophole wasn't closed until 2012.
Despite the fact it cost the the UK EUR170m revenue. It cost Denmark EUR8m.
It will remain a UK law and apply to EU imports until revoked.