Post Brexit import experiences

[Marc mndt]

There seems to be a difference between UK makers on how they handle VAT (some deduct VAT from their listed website price when selling to non-UK buyers, others don't).

I thought it would be helpful to share our experiences so EU buyers can have an idea of the final price they're paying (sale price + VAT + customs + handling fees etc) when buying a jacket from a UK maker/seller post-Brexit.

 

[Marc mndt]

First example.

I bought a jacket from ebay.co.uk. I didn't use eBay's international shipping service (Pitney Bowes Limited), I chose UPS express shipping.

I payed £705 for the jacket, shipping included. However, I asked the seller to declare the jacket as a gift with a value of €50.

Total customs/handling fees were €26.23.

 

[Buco]

Yeah I heard about these tariff's being applied. What happened to that free trade deal that was agreed

 

[Marc mndt]

Yeah I heard about these tariff's being applied. What happened to that free trade deal that was agreed

I did some internet searching...Apparently the free trade deal only concerns duty fees (there are none). Nonetheless VAT needs to be paid at the rate that applies to the same goods in the member state. In my case (Netherlands) that's 21%.

In my example I had to pay 21% over €50 = €10.50. On top of that, UPS charged €13 handling fees. On top of that, I had to pay 21% BTW (=VAT) over €13 handling fees

 

[Mich486]

It’s clearly the VAT the issue. It’s weird if they choose to not deduct it and keep it as profit, as before Brexit all EU sales where susceptible to UK VAT. Seems a small gain in the short term but potentially less clients in the future. On the other hand, they should start deducting it also from US sales which apparently they never did. So if they decide to do things right probably they have to raise a bit the prices before VAT. Barriers to trade never work out in anybody’s favour. It’s basic economics.

That said I think it’s an oddity amongst these small makers to keep the VAT as profit on international sales as regular businesses and online shops normally deduct VAT if it’s not due. There is no loss for them as they simply don’t collect tax for the government on those sales.

 

[MrProper]

I did some internet searching...Apparently the free trade deal only concerns duty fees (there are none). Nonetheless VAT needs to be paid at the rate that applies to the same goods in the member state. In my case (Netherlands) that's 21%.

In my example I had to pay 21% over €50 = €10.50. On top of that, UPS charged €13 handling fees. On top of that, I had to pay 21% BTW (=VAT) over €13 handling fees

View attachment 300468

As I understand it, customs are incurred if the value exceeds EUR 150 and the goods do not meet certain guidelines.
E.g. made in Taiwan, shipped from UK = duty. Completely produced in UK with materials from UK = duty free.

Perhaps this also applies to leather jackets whose processed leather comes from Japan, for example. There will probably be the question of how much of the japanese leather is is part of the rating of the jacket.

 

[indigoeagle]

E.g. made in Taiwan, shipped from UK = duty. Completely produced in UK with materials from UK = duty free.

Would that be based on a special UK/EU-trade agreement?

 

[indigoeagle]

Marrkt (which is run by the same guy, I think, who operated superdenim) offers "pre-owned" clothes.
They say the following:
https://www.marrkt.com/pages/customers-in-the-eu

"Marrkt sells pre-owned items so therefore does not have VAT tax included in the price. No matter where you are in the world; UK, USA, France - the price is the same and no tax is added or deducted.

We will send our orders to customers in the EU in line with the Free Trade Agreement terms and we do not expect our customers to incur any import fees."

Is this a UK specific rule? Or universal?
If a product is used/pre-owned, and the VAT was paid at one point, any subsequent sales would not incur any VAT charge?

 

[MrProper]

Would that be based on a special UK/EU-trade agreement?

I had read a German article about this that contained some examples. The principle is described here and applies to all partner countries of the EU
https://trade.ec.europa.eu/access-to-markets/en/content/quick-guide-working-rules-origin

 

[air]

Marrkt (which is run by the same guy, I think, who operated superdenim) offers "pre-owned" clothes.
They say the following:
https://www.marrkt.com/pages/customers-in-the-eu

"Marrkt sells pre-owned items so therefore does not have VAT tax included in the price. No matter where you are in the world; UK, USA, France - the price is the same and no tax is added or deducted.

We will send our orders to customers in the EU in line with the Free Trade Agreement terms and we do not expect our customers to incur any import fees."

Is this a UK specific rule? Or universal?
If a product is used/pre-owned, and the VAT was paid at one point, any subsequent sales would not incur any VAT charge?

It is a common rule, but I don't know how it applies when VAT was paid in one country and it is imported to another. You will have to explain to customs officials that those are second hand clothes that have already paid tax, and they will have to believe you, assuming the it's allowed.

VAT stands for Value Added Tax, at every stage of production value is added this increase is taxed.
Say I plant some wheat, when I sell it to to a mill, they pay me VAT which I send to the government.
The mill turns the wheat into flour and sells it to bakers and supermarkets, the mill collects VAT from them. The mill then subtracts the VAT they paid me from the VAT they collected from the bakers and supermarkets and sends the difference to the government.
The process keeps repeating until the product is purchased for use. At this point resale value would usually be lower than purchasing price so there is no increase in value therefore no VAT. For simplicity many countries don't charge VAT on second hand goods even when they have increased in value.

 

[MrProper]

The VAT is paid by the first private person.
If I have a business and need goods A and B to turn them into C, then b2b usually trades without a VAT. I.e. goods A and B are net. If I sell C to a private person, the VAT is added to my selling price.
If this private person sells goods C to another private person, no new VAT is due.
If I buy goods C from abroad and there is no tax agreement like there is within the EU, then I have to pay VAT, regardless of whether the supplier has already paid this in his own country or not.

 

[GHT]

For what it's worth, I bought a hat in the US, I was charged the American equivalent of VAT, I then paid $55 carriage and when it reached the UK I had to pay a further charge, for what, I've no idea.

Keeping that experience in mind, I bought a hat from Esther Weis in Belgium, pre-Brexit, she told me the price including carriage. I took a chance. I bought the Euros at the Post Office and mailed her the cash. I also took a second chance by telling her to paste a notice on the hat box. "SAMPLES, OF NO INTRINSIC VALUE." My hat arrived, safe and sound a week later. I shall probably get a call from the customs office after they have read this.

 

[MrProper]

I shall probably get a call from the customs office after they have read this.

No, probably not Because there are tax agreements for everything within the EU.
Now, in post-Brexit, things will look different.

 

[Tom71]

The VAT is paid by the first private person.
If I have a business and need goods A and B to turn them into C, then b2b usually trades without a VAT. I.e. goods A and B are net. If I sell C to a private person, the VAT is added to my selling price.
If this private person sells goods C to another private person, no new VAT is due.
If I buy goods C from abroad and there is no tax agreement like there is within the EU, then I have to pay VAT, regardless of whether the supplier has already paid this in his own country or not.

Just to add to this: Obviously VAT is calculated as a percentage of the value (or "price) of the good or service. When I went to the DHL office yesterday to ship my Thedi, I enquired about shipping to the UK post Brexit. The lady told me, "all is as before", i.e. you don´t have to fill out a customs-declaration. I didn´t press, but this can hardly be correct...

 

[MrProper]

Just to add to this: Obviously VAT is calculated as a percentage of the value (or "price) of the good or service. When I went to the DHL office yesterday to ship my Thedi, I enquired about shipping to the UK post Brexit. The lady told me, "all is as before", i.e. you don´t have to fill out a customs-declaration. I didn´t press, but this can hardly be correct...

I think I have read that the UK has waived formalities for six months if something is delivered from the EU to the UK so as not to cause even more chaos.

 

[Cornelius]

Man, I can't imagine what a headache it must be to be working in UK or EU Customs right now...

 

[Tom71]

I think I have read that the UK has waived formalities for six months if something is delivered from the EU to the UK so as not to cause even more chaos.

Didn´t know this. Thanks a lot. This could explain things.

Of course this would mean that the UK waives millions in GBP on VAT too...

 

[Dr H]

Bartender Edit: Feelings run high on this issue, but, folks, please remember that the Lounge operates a strict "no politics" rule, which will be evenly maintained on this issue as well.

This thread has been permitted to go ahead on the basis that it sticks to providing information as it comes out which helps members to buy and sell across international boundaries, but if it becomes an argument on the politics of Brexit - for or against - it will be subjected to House Rules. If you find the thread helpful, please work with us to keep it within the bounds.

 

[MrProper]

I think I have read that the UK has waived formalities for six months if something is delivered from the EU to the UK so as not to cause even more chaos.

I think I wasn't entirely correct. the customs formalities can be simplified and reported up to 6 months later. If everything goes right, they won't lose anything.
Personally, I think that most of them don't even know what to do and what not to do. it will be a mess.

https://www.gov.uk/goods-sent-from-abroad/tax-and-duty

https://assets.publishing.service.g...a/file/949579/December_BordersOPModel__2_.pdf

1246 pages https://assets.publishing.service.g...rade_and_Cooperation_Agreement_24.12.2020.pdf

 

[bn1966]

Expecting a delivery from Pike Brothers (Germany) to the UK next week, took a while to get the order processed due to issues with UPS. Another package due from France as well very soon...nice to be trading again...