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Import tax charges prove costly

Retailers who sell goods to customers in the EU can now take responsibility for import VAT charges thanks to a change in the law.

Matt Orange, Client Manager here at Dyke Yaxley, says since Brexit at the start of the year, the majority of goods sold by UK retailers to consumers in Europe have been subject to import VAT when they enter the EU.

“The rule meant that customers faced additional fees before they could take delivery of their goods.

“And for many consumers, the charges came as a shock as the first they knew about it was when they were asked to pay a hefty fee to release their goods from the shipping provider.

“Understandably, this led to a poor shopping experience for the customer who often wrongly blamed the retailer for the extra charge.

“But now, the Import One Stop Shop initiative has been introduced which gives UK businesses the ability to deal with the EU import VAT on behalf of their customers, as long as the shipment is worth less than 150 Euros.

“It’s not mandatory, and some businesses may choose to continue to leave it for their customers to pay the import charges, but you may risk losing the goodwill of your customers when they realise you could have dealt with the extra costs instead.”

Matt says businesses that sell using online services such as Amazon or Etsy would find that the marketplaces themselves had registered for IOSS and they would be responsible for paying the VAT to the EU member states.

“But if you sell through your own website, you will need to register for IOSS yourself and this registration will of course bring additional administration responsibilities.”

Matt says UK businesses could register for the IOSS in an EU member state of their own choice, and when selling goods online, they would apply the VAT rate of the EU member states where the goods were being delivered.

IOSS VAT returns need to be submitted monthly as do payments of any associated VAT to the EU member state your business is registered in for IOSS purposes.

“Currently there are organisations emerging who offer to deal with the EU VAT on your company’s behalf, but they charge for their services.

“If you think your business may be affected by the changes to the import VAT rules, it’s vital to seek professional advice to ensure you’re complying fully with the regulations.”

Matt Orange, Client Manager

The Author

Mel Edwards - Marketing

Mel Edwards

Marketing Assistant

Mel joined Dyke Yaxley in May 2017 as a Marketing Assistant after spending 2 years as a Group Administrations and Marketing Manager for a local Shrewsbury healthcare agency...