Easy. They open the package and look to see that VAT was collected as a separate line item, and they verify the sellers VAT account number. The onus is on the seller to make sure the correct documentation is provided. Trust me, they do look at these things all the time, based on customer complaints about how much the tax is or that it delayed delivery.

https://www.revenue.ie/en/vat/vat-records-invoices-and-credit-notes/invoices/what-information-is-required-on-a-vat-invoice.aspx

-Hans

Damn.

How does this work if, say I had way overstocked on some of G-P-E parts and wanted to sell some to a UK contact? Technically, they are still new parts, but since I am not a reseller, aren't they now used parts? Would I get hammered for selling something that is "used" but it is still in the new packaging?

Oh god, don't bring up shipping to Germany. Talk about Prussian attention to detail. I cringe whenever I have to ship there because I just know there will be one issue or another that'll either delay things or cost somebody an extra fee.

At least with Australia I know what's going to happen. Packages almost always arrive within 48 hours of the first email asking "Hey, where's my package?". Never fails.

-Hans

Haha yep this is so true! Recently had some parcels arriving within 3 weeks yet received an envelope yesterday that took over 6 weeks - the longest was almost 3 months but this was mid-last year when there were very few international flights. The good thing is at least they arrive!

As this rule impacts on me and from speaking with Steve Young last week, I have some information about this that I got from our U.K VAT people today, which i think might clarify a little better. Perhaps...

Imported goods: accounting for import VAT
These are normally charged at the same rate as if they had been supplied in the UK.

VAT registered businesses can account for import VAT on their VAT return by using postponed VAT accounting. Accounting for VAT on your VAT return in this way allows you to declare import VAT and reclaim it as input tax on the same VAT return. You can reclaim the VAT incurred on the imported goods you own as input tax subject to the normal rules.

Alternatively a business can choose to pay import VAT on importation. If you choose to do this, you can reclaim the VAT incurred on the imported goods you own as input tax subject to the normal rules. To claim input tax you will need the import VAT statement as evidence. A shipping or forwarding agent cannot usually reclaim this input tax because the goods were not imported to be used in part of their business.

Valuation of imported goods
The value for VAT of imported goods is their customs value, determined by the rules in Notice 252, as well as:
incidental expenses - such as commission, packing, transport and insurance costs incurred up to the goods’ first destination in the UK ;any Customs Duty or levy payable on importation into the UK; any Excise Duty or other charges payable on importation into the UK - except the VAT itself.

The value of VAT is normally added to box 22 of the import declaration automatically. If it needs to be calculated manually, you must enter the code ‘VAT’ in the rate column of box 47, and enter the value in the amount column.

As from 1st Jan commercial parcels under £135 do not incur import charges as the vat is now at the point of sale not import and the seller may have consider registering for vat in order to account for this.

Normally, if you buy parts from the USA they will charge their taxes and when you import the parts you will be charged VAT on the goods. If your not VAT registered, then postal charges on a consignment of goods under the value of £135 will not incur UK VAT.

Goods that are outside the UK at the point of sale
The seller must work out the consignment value of the goods by deciding their ‘intrinsic value’, this is the price the goods were sold for, not including: any transport or insurance costs, unless they are included in the price and not separately shown on the invoice
any other identifiable taxes and charges. Unless sent individually, the seller must add the individual values of all items in a consignment together to get the total value of the consignment.

If a seller makes changes to the value of the consignment so that its total value goes above £135 they may be liable for import VAT and Customs Duty, and have to adjust the VAT already accounted for at the point of sale.

Non VAT registered - If the goods in the USA are under the £135 (excluding USA VAT and shipping costs) then so long as they fill in the forms correctly then there is no VAT. If the cost of goods exceed that, you pay VAT on all of the costs when it comes into the UK and you can't recover the VAT.

If you register for VAT - When you purchase the goods and supply the US business with your VAT number, they charge you their taxes and shipping and when the goods arrive in the UK VAT is charged on the total cost, however you can recover the VAT on the UK import of the goods on your VAT return.
If you register for VAT then you can recover any VAT that has been charged on the import of the goods. So long as the seller completes the declaration label correctly that will show the value of the goods and you will be charged VAT accordingly.

I hope this helps a little.

But over £135 is ok? So we need to just place larger orders or group then together?

But does the rule "go away" if you go over the limit? Or do additional regulations kick in?

-Hans

In the US I had to invest in new software, new website platform, ect to work with the new sales tax rules that were placed in effect in 2018/2019. Over all about 35k Kinda a mess to say the least.. Everyone wants more services from their goverments.. they gotta find a way to get the money. Just makes business almost imposable.. My bookkeeper did sales tax about 6-8 hours a month before the rule changes.. Now its over 40 hours because we collect it 9 States, and over 100 jurisdictions. Just in sales tax licenses we pay over $2500 a year

How will you get the necessary forms from the UK to do all of this paperwork? Does the UK send you a stack or do you print them from online?

I'm actually considering not shipping to UK.
Im not collecting or paying vat for them.

In respect of the £135 limit, I could not get them to confirm that should a valid VAT number be given to a USA supplier, that they then check and verify ( a simple online check which you could print off for your records, or screenshot it, etc) and then mark the package as a "reverse-charge" meaning the importer pays the VAT just as he would on orders over £135. And that is where the issues lie because smaller orders place the tax burden onto the USA supplier which in turn make USA sales to UK customers unattractive. I shall continue to question them today about this so as to give more clarity.

As you mentioned before EBay takes care of the vat collection. Plus you don’t have to do any separate paperwork for the UK.

When someone in the UK wants to place an order for <$135, ask for their itemized order via email, and their EBay Id. Create a for sale item that only they can buy, building the EBay fees into their total price. EBay will then add the vat to their order at checkout. This seems like a lot less work than registering for a vat number and filing paperwork with another entity (uk tax office). If a uk customer wants to place an order for $135 or more, have them order through your site, fill out the standard customs form and they can pay vat when they collect the package.

You don’t have to file any tax paperwork with the UK in either scenario.

ColourDMD is about the only one I know collecting GST for Australia. If I ship internally and then ship to Australia I avoid this anyway. None of the other places I buy from attempt to collect GST that I’m aware of.

I’ve had many packages opened an inspected by customs coming from the states too. Sometimes they even include a form saying that they opened it to take a look see.

I didn’t know GPE was a pinsider. To busy trolling I guess. I know who I’m order electronic parts from now.

We have formed a partnership with pinball bazaar in the UK where many of our mods can now be purchased. Shipping time is still a factor, but at least I don’t have to deal with the VAT nor do buyers.

Sounds like the easiest way if you want to sell to the UK is to have orders only over 135eu.
That's what I'm doing at least....

It's official; I no longer accept UK orders for as long as this is in effect.
http://pinball-mods.com/oscom/shipping.php

Hey JP - who do you use as a freight forwarder? I use Shipito and they definitely collect the GST

thats Ed for sharing this.. Looks like I have to make some changes for some exporters here now too.

eh yes you do for anything under £135. James will pick up vat for stuff over that.

Neil.

so I've had about a dozen or so packages from the US under and over the £135 and all is fine.

No, because he will place a bulk order above 135 pounds so I don’t have to deal with the vat from my end.

Welcome to reality, where reality should have been confronted years ago.

What I said

Would this possibly being used as a way to slow down China ? I mean, you buy something from China from Ebay and it comes with dirt cheap shipping. And dirt cheap prices.

I'm still shocked at a 20% VAT..... What...the....hell..... Greedy sumbitches.

Agree and most of it is crap, about time we started making our own stuff again.
I remember in the 70’s as a kid if a toy was made in China it was going to break in no time.

VAT pretty painful except the one below

B37FF901-9A91-4345-8886-D031A52FAE1B (resized).jpeg

So are you all going to bin your trade with the EU too As I noted before this is not a a Brexit or UK issue. It was something that the EU was working on long before brexit and from July the same rules that the UK has implemented are coming to the EU:

-----------------------------------------------------------------------------------------------------------
Dear Customer,

From 1 July 2021, there will be significant changes to the European Union’s Value Added Tax rules applying to the shipment of goods into the EU. While these reforms primarily target B2C e-commerce imports, impacting both businesses and online shoppers, they may also impact B2B imports.

If you ship goods into the EU, we recommend that you begin preparing your business now.

Please consider how the following changes may impact your business:

Removal of the €22 VAT exemption for imports
The VAT exemption currently in place for goods imported into the EU with a value up to €22 will be removed, meaning that these shipments will now be subject to VAT. These low value goods will therefore also require formal customs clearance, although most goods valued up to €150 remain exempt from customs duties.

Please ensure you provide a complete and accurate commercial invoice to reduce the risk of customs delays:
Follow our useful guide to completing a commercial invoice
Submit your commercial invoice electronically with UPS Paperless® Invoice so customs can start clearing your shipments before they reach the border
Launch of the Import One Stop Shop (IOSS) Platform for imports up to €150
The EU is launching an Import One Stop Shop (IOSS) platform to simplify the declaration and the payment of VAT for B2C imports up to a value of €150.

This optional platform only requires you to register with a single EU Member State to manage your sales VAT throughout the EU, removing the need to register for VAT in every country you are selling goods to.
If you are a non-EU based supplier or marketplace selling goods to consumers in the EU, registering with the IOSS means you can collect accurate VAT for the purchase from the consumer at the point of sale, which can then be declared and paid in a periodic VAT return.

Shipments containing a valid IOSS number will therefore not be subject to import VAT, which may help them move through customs quicker.

If your company does not have an EU-based establishment and you wish to register for the IOSS, you will need to appoint an intermediary to settle VAT through this platform.

Registering for the IOSS platform is not obligatory and you can continue to declare and pay VAT on EU imports as you do today.

Here is a useful checklist to prepare your business for these changes:
Identify which areas of your business are impacted by the new EU VAT rules
Assess your VAT accounting needs for the EU: Systems and master data updates are likely to be required to identify and apply the appropriate VAT rates in multiple jurisdictions
You may consider registering for the IOSS platform if you want to use a single registration to pay VAT throughout the EU for B2C shipments up to € 150
If you register for IOSS, appoint an intermediary to handle tax compliance on your behalf in the EU in case you don’t have an EU-based establishment
Review and potentially cancel existing foreign EU VAT registrations if you wish to replace these with a single IOSS registration where applicable
If you choose not to register for the IOSS platform, ensure you have a valid UPS account to charge import fees to
If you are selling through an online marketplace, contact them to understand who will be responsible for VAT accounting for your B2C shipments up to €150
If you are using UPS WorldShip or H2H as your shipping system, please make the necessary system updates when they become available
If you choose to pass on import charges to your consignee, please inform them upfront that import fees will be due for their shipment

Want more information to prepare your business?

Download the UPS EU VAT Reform Guide

Make sure to also watch the UPS EU VAT Reform Webinar

We thank you for your continued trust in UPS.

Your UPS Team

From what I understood here in Belgium : yes the 22eu restriction goes away.
If the seller is registered to the system, the customer can prepay vat and the package will pass customs easily.

If the seller is not registered, as a customer you can still order. Small sellers outside EU can still just throw something in a parcel without all the registrations online.
The post office will handle the vat/customs then, and in addition of the vat, they'll charge a handling fee (10 to 15eu).
Same handling fee as they charged now for packages that were over 22eu.
A 5eu toy from China will be added 1eu in vat and 15eu in handling fee.. expensive, but you still receive it.

That seems the difference with the UK - from what I understood the UK does not give the option to have it pass customs after the buyer pays an additional fee, they expect every seller to declare the customs or they block it ?

Not unexpected, but still unfortunate. I miss the days when I was trading scale model kits with a couple internet acquaintances in the UK, I could send two kits for $10-$15 total without any customs fee's. Now the same box would cost me $50-75 to send plus all the duty and tariff and whatnot.

I'll have to look into the IOSS platform. On the surface it sure sounds easier than the UK requirement of establishing a full sales tax account and having to do regular financial disclosures. It also looks like people using UPS and similar services really won't see as much of an impact, mainly just collecting the VAT from the customer and paying it through to UPS. Only guys like me who use the postal service currently with have a drastic change.

On the flip side, now that Marco carries nearly all of my stuff (albeit at a higher pricing than myself) I may just transition all my EU sales over to Marco starting on July 1st. This was my original plan anyway.

-Hans