Sciencemadness Discussion Board

eBay alerts sellers on UK & EU ecommerce VAT reforms

Mush - 24-10-2020 at 03:20

This change will effect us in a very unpleasant way both sellers and buyers.
Everything going to be even more expensive coming from China.
It will effect small time sellers as well.

eBay alerts sellers on UK & EU ecommerce VAT reforms
https://www.avalara.com/vatlive/en/vat-news/ebay-alerts-sell...

"eBay is alerting its sellers to the upcoming UK and EU VAT changes on ecommerce. Under the UK’s Brexit ecommerce reforms following the ending of the Brexit transition period on 31 December 2020, marketplaces like eBay will become responsible for charging, collecting and remitting the UK VAT on certain transactions.

Similar reforms are proceeding with the EU VAT ecommerce package, including simplifications of pan-EU reporting, via the VAT ecommerce package which comes into effect on 1 July 2021.

Both the UK and EU are withdrawing the VAT distance selling simplifications, too.

Ending import VAT exemption threshold

In both cases, the UK’s and EU’s low value consignment stock relief – a VAT exemption on imported parcels – will be withdrawn. These thresholds for the UK and EU are currently £15 and €22, respectively. Instead, VAT will be charged at the point-of-sale (the checkout) up to values not exceeding £135 and €150, respectively.

UK ecommerce imports and oversees sellers

Firstly, from 1 January 2021, and UK imported sale on eBay (or any facilitating marketplace) not exceeding £135 will change VAT treatment. The marketplace will take on the VAT obligations and rights. The UK or overseas seller will first make a zero-rated supply with the right to deduct sale to the marketplace. They will record this in a UK VAT return. The marketplace must then make a UK domestic VAT sale to the consumer. The VAT due is charged to the consumer by the marketplace at the time of sale via the checkout. This is instead of at the border as import VAT.

Secondly, for overseas sellers only, eBay (or any facilitating marketplace) will be responsible for the VAT obligations on any value sale where the goods were already in the UK. B2B sales may involve the VAT obligations being shifted to the customer if they can provide a VAT number.

All sellers in both cases above must show the gross price and VAT rate in their UK listings for eBay. This will enable the marketplace to determine the correct VAT due. The prices will be displayed to customers inclusive of UK VAT where eBay is the marketplace VAT deemed supplier in the checkout.

EU VAT package reforms

eBay is also alerting sellers to the EU’s reforms on 1 July 2021. It includes the same import VAT collections changes, non-EU sellers VAT obligations and the marketplace deemed seller new rules. But a new, single EU VAT return – One Stop Shop OSS – will also be available for sellers to declare their pan-EU distance sales.

eBay reminds sellers that the EU €22 VAT exemption on parcel sales from outside the EU to EU consumers is being withdrawn. Where eBay has facilitated the sale, it becomes responsible for charging sales VAT to the buyer if the consignment value does not exceed €150. eBay will do this through the checkout process – replacing the current import VAT rules and payment to customs. Note – where eBay is not involved, any sellers can use a new VAT Import One Stop Shop IOSS return to cover all imported sales up to €135.

For non-EU sellers, eBay will also be responsible for all EU B2C sales on its marketplace when the goods are already in the EU at the time of the sale. The seller must first sell the goods to eBay, which then sells and charges local VAT to the EU consumer.

In both cases, sellers must provide eBay with prices of goods and the right VAT rate. eBay will list the prices inclusive of VAT."

Fyndium - 24-10-2020 at 04:09

Many overseas suppliers have established warehouses in ETA. They import their own stuff at base rate, and sell them. The VAT paid will be reduced because they can import the stuff for example $2 value and sell for $12.

wg48temp9 - 24-10-2020 at 10:59

Although I took full advantage of the low cost items from China, it seemed crazy that I did not have to pay import duty or VAT on most of my items I purchased from there. How can UK suppliers compete with that?

Many years ago when I ordered something from overseas the delivery guy would knock on the door and ask me to pay the import duty or I would not get the parcel. One trick was if the item was called a sample no duty was due.

I guess the government has to find the extra cash to help fund the effects of the pandemic from somewhere. I guess VAT and income tax will be increased too eventually.

[Edited on 10/24/2020 by wg48temp9]

RedDwarf - 24-10-2020 at 12:12

I'm with wg48, I've taken advantage of the system when it's suited me, but I support the change on both moral and economic grounds - it will make a fairer system. One of the very few things that I've agreed with Trump on is how it's possible to post me a parcel from china to the UK and pay less postage than it would cost me to send a Christmas card within the UK (I don't actually send any Christmas cards but that's besides the point), the UK postal system shouldn't be subsidising Chinese suppliers.
Quote: Originally posted by Fyndium  
Many overseas suppliers have established warehouses in ETA. They import their own stuff at base rate, and sell them. The VAT paid will be reduced because they can import the stuff for example $2 value and sell for $12.

VAT is charged on the selling price so will have a significant effect on the price they need to charge.

Fyndium - 24-10-2020 at 14:17

I have had parcels go to customs only twice so far, and all they wanted was ransom, and immediately when it was filed, they released the parcels.

This EU thing has been set due many years ago, so it is just a coincidence it happens at the age of C.

Herr Haber - 25-10-2020 at 08:20

So we're gonna have to pay for shipping. Ok, I guess that's fair.
And we're gonna pay VAT. Mumbles... this thing is getting expensive.

Oh and UPS / DHL mandatory fee (racket) for getting your item out of customs hands too ? With a flat fee that will deter you from placing orders under 100 or 200 bucks depending on how much you want it.

Sweet, that 70$ bill just doubled...

Mush - 25-10-2020 at 11:01

Quote: Originally posted by Herr Haber  
So we're gonna have to pay for shipping. Ok, I guess that's fair.
And we're gonna pay VAT. Mumbles... this thing is getting expensive.

Oh and UPS / DHL mandatory fee (racket) for getting your item out of customs hands too ? With a flat fee that will deter you from placing orders under 100 or 200 bucks depending on how much you want it.

Sweet, that 70$ bill just doubled...


Exactly.
There will be no way around it. All ecommerce businesses, everybody has to do the same, pay tax on the smallest item coming outside from the EU.

When I order from China, about 50 percent of my orders get vat-ed , other half slips through. Small size items always get through. Shipping method also matters. The VAT charge is based on the value what the Chinese write on my parcel. Border officers seems to accept that value most of the time without problem.

I understand why this change happening but from a buyer point of view is annoying and will significantly increase the price of a single ground glass joint.

Fyndium - 25-10-2020 at 11:08

Except if someone sells stuff via their own website. Then the sales can be made according to local law and the taxes ate left for the buyer to report.

Mush - 25-10-2020 at 11:42

Quote: Originally posted by Fyndium  
Except if someone sells stuff via their own website. Then the sales can be made according to local law and the taxes ate left for the buyer to report.


I am not sure about that.

https://www.avalara.com/vatlive/en/eu-vat-rules/distance-sel...

Distance Selling EU VAT rules

"Businesses selling goods to consumers in other countries most likely will face an obligation to charge and collect local consumption taxes. "

It seems it is going to even worse.

"It’s actually worse than that. Not only will you pay VAT, there will also be clearance costs. A €2 order will have €15 clearance cost added, making it useless to order cheap stuff."

https://www.reddit.com/r/Aliexpress/comments/fgntrb/about_ne...

https://scaleroads.com/en/dropshipping-goods-under-22-euro-a...

Modernising VAT for cross-border e-commerce
https://ec.europa.eu/taxation_customs/business/vat/modernisi...

EU July 2021 ending €22 import VAT exemption; new Import OSS return
https://www.avalara.com/vatlive/en/vat-news/eu-2021-ending--...

[Edited on 25-10-2020 by Mush]

Fyndium - 26-10-2020 at 06:36

I have already received multiple packages sent from an ETA country, which I ordered from China. So, I don't know (and don't really care) how they handle it, but I would think that the seller knows a guy, a relative or an associate, who imports stuff in bulk to ETA at some minuscule price, and then ships them to customers as they order, and no one really reports any sales or taxes to anywhere because basically the deal has been made in China and the guy just ships it per request.

Or at least that's how I'd do it. :P

Then there's that not all countries levy taxes and control customs fees too well. This was just recently in some headlines how EU loses millions a year for sloppy import clearances. Stuff just slips through, someone might even be paid off to look away or sign something that's missing a lot of articles, and in it goes.

People send money to their home countries as a routine, so I don't see this kind of scheme not at all far away put. We must keep in mind that many, if not most (eBay) sellers are not companies, merely businesses, but one-man mailbox shops, who accumulate stuff in their homes, sheds, separately purchased warehouses, or wherever they fit, and ship them as people order stuff, some don't even store stuff but go buy it as it is bought and ship it off. They may not even file any actual ledger, because they consider themselves just a small home-business who makes few bucks for selling stuff "bought for personal use" initially. Of course this is not the truth, but in my country I've read many headlines from people who have sold huge amounts of stuff online, left all taxes and stuff unpaid, and eventually got caught and charged. Someone made over 200 thousand euros of calculated profit alone from selling all kind of junk.

Just food for thought, next time you receive that fancy flask of yours from China. A good chance it does not originate from any factory or business, but from someone's bedroom corner.