dublinpilot wrote:
So Customs fees=your own countries VAT.
If that is what it is, that is a bit of a communications own-goal…
Presumably a UK company selling into the EU must register for and charge VAT in the EU country if their turnover exceeds the distance selling limit (approx €40K but varies by country).
How that would be enforced, I’ve no idea. That country’s tax authority would first have to know your business exceeded the limit. I’ve no idea how they would then enforce a domestic tax law in another non-EU country.
IIRC they apply to intra-EU sales, below the threshold a EU-company selling to a customer into another EU country can charge their own VAT rate, above it it has to be registered in the customer’s country and apply the customer’s rate.
In the case of selling from NL ( and I presume all other EU countries ) to the UK the situation is complicated. For shipments under £175 I must charge VAT unless the buyer has a UK tax ID. For orders over that threshold I do not have to charge VAT. I must have a
UK VAT number and a UK EORI number. For shipments to NI this is different again. I must treat these as normal ICT transactions but must have a NI EORI number.
Although I am not lazy or stupid it is a lot of extra hassle for not a lot of turnover.
You have to register for UK VAT to sell to the UK?
Do you have to register for US State tax to sell to the US? And charge VAT too? Is this for any business in the EU, or just retail outlets?
That’s pretty weird. It is likely to push UK buyers to buy from the US, etc, rather than the EU.
Peter wrote:
It is also going to be awfully hard to collect import VAT on downloaded software, in that situation… just like they can’t on software downloaded from US firms… like GPS databas
From EU pov UK is now “just another country outside the customs area” with the small advantage, that duties are 0%. And as with imports from all of these countries, import VAT is owed by the buyer – not by the seller and not by the forwarder.
And absolutely yes, there are some cases in which it is (at least for the time being) much easier to not pay these import VAT than others (like e.g. Software downloads but also the case of a UK plane imported via Ireland). Doesn’t change the fact that it is tax fraud if one doesn’t pay it. At least in Germany the rules are very clear: If the forwarder did not trigger import VAT for you, you have to report yourself to the nearest customs office to do so.
Malibuflyer wrote:
And as with imports from all of these countries, import VAT is owed by the buyer – not by the seller and not by the forwarder.
Not into the UK…apparently foreign sellers have to register with UK HMRC and pay UK VAT!
https://www.bbc.co.uk/news/business-55530721
“VAT is to be collected at the point of sale”. How HMRC are going to actually enforce this is unanswered. The whole idea is just insane.
alioth wrote:
Not into the UK…apparently foreign sellers have to register with UK HMRC and pay UK VAT!
That is getting very technical and I’m far away from being an expert for British VAT regulation.
This, however, sounds to me more like a collection regulation than a question of who ultimately owes the tax. Therefore I would assume that also in the UK the importer (i.e. the buyer) still owes the tax but it is collected by and from the seller. This is relevant e.g. in cases where the seller did not forward the taxes to HMRC (either fraudulently or because they went bankrupt between collecting from customer and transferring to HMRC). I would assume that in these cases the buyer still has to pay the Tax.
Under UK VAT law, the seller is required to invoice and collect the correct amount of VAT for the particular situation.
If he does not, then HMRC can go after him for the amount he was deemed to have invoiced.
There is an old pre-brexit trick where a mainland EU customer supplied a (accidentally or deliberately) bogus VAT number and got the goods VAT free. And then the seller prob99 didn’t recover the VAT from the buyer later, when this was discovered, so you lost the 20%. Even big companies would not straighten it out because they have no “process” for it. And it is only in recent years that there was an EU VAT number validation site, and even that often failed (we used it with an automated script in our online shop, and many man-days were wasted on this).
As a B2B business we actually got a miniscule % of hassle with customers, but I know someone in a retail facing mail order business and he is pretty well p1ssed off with the stunts which people pull to get a freebie. He has a repair business and had so many people lie about what they returned that they now video everything, starting with opening the parcel. Then there is the struggle with these dickheads leaving malicious bad feedback on trustpilot etc. I think a lot of mail order retail is actually pretty horrible. From many years ago I know running a computer shop is bad enough 
So I can see it is tempting for a mail order trader to just withdraw from a market once the hassle goes above some level.
The way the UK is implementing this looks like grabbing the brexit opportunity to curb VAT evasion on cross border retail transactions (which were always present and not related to brexit, but brexit would expand the issue to mainland sellers who would otherwise invoice zero VAT) but it is utterly dumb because most small mainland EU companies won’t bother to register for UK VAT. I would, but your average mountain bike parts seller isn’t going to… This move is unprecedented, and some don’t expect it to last because it just fuels purchases from China.
Someone here on EuroGA kindly got me some bike inner tubes from France, when the French online shop bombed every time I went to pay. It may have been related or not, but they didn’t admit to any policy; they just said their shop software has problems with the UK.
There is, as Peter says, a big difference between B2B, where VAT is a non-issue because payment is VAT free as long as it is genuine B2B, and retail.
Peter wrote:
This move is unprecedented
Quite the contrary. It is actually the (emerging) EU standard, and has been in force for distance selling software etc. in the EU for some time. It will be required for goods in the EU from mid 2021 as well – obliging the seller to bill the VAT of the consumer’s country, and to then pay it to the country where the consumer resides.
The main problem is that the EU has created a mechanism making this easy for software etc. sales called the ‘mini one-stop-shop’. A vendor registers there once, and this then can be used to pay VAT for all EU countries, rather than having to register in each. Of course the UK is not part of this, and some sellers may decide having yet another one of these things is too much hassle.
