Royal Mail is the leading provider of postal and parcel delivery services in the UK. We deliver to over 230 countries and territories worldwide.
EU Value Added Tax advice from Royal Mail from 1st July 2021
Changes with regards to EU Value Added Tax (VAT) are coming to businesses selling goods to customers located in the EU. The changes will take effect on the 1st of July 2021. Royal Mail have three options available to help you manage these changes – depending on the size and nature of your business.
If you do nothing, then your item will be delivered Delivery Duties Unpaid (DDU). The customer may have to pay import VAT (and customs duties, if payable) and a handling fee in the receiving country. These charges will depend on the country you are sending to, the value of the item and whether it is a gift or commercial goods.
Royal Mail EU Value Added Tax advice
1. Selling through a marketplace
If you sell through a marketplace, they are likely to have registered for IOSS. If so, you just need to assign their IOSS number in the pre-advice to us for the items sold through that marketplace.
2. The Import One Stop Shop (IOSS)
You can register yourself, via an intermediary, and file your own EU VAT returns. Or, if you prefer to concentrate on selling, you may want to consider Royal Mail’s ‘assisted’ IOSS solutions with their partners Deloitte and Taxamo.
Whichever approach you choose it allows you to calculate and collect VAT from your customer at the checkout and pay it directly to the EU. You just need to assign the right IOSS registration number to each item in the pre-advice you give to us.
3. Postal Delivery Duties Paid (PDDP)
Royal Mail PDDP is currently undergoing trial, due to be operational by July. If IOSS isn’t for you, or you are sending items above €150, Postal DDP may be the answer. It allows you to calculate and collect VAT and customs duties from your customer at the checkout and pay it to the EU tax authorities via Royal Mail.
For more information on handling EU Value Added Tax when shipping with Royal Mail, see the help page on their website.
I would suggest broadening the discussion put somewhat to discuss the issue of whether UK businesses will be able to register for IOSS directly or need an intermediary. Plenty of discussion over on UKBF.
As a UK registered VAT company, why on earth would we want to collect VAT for the EU? Most of our sales of antiques are via eBay auctions. We would be a net VAT contributor to EU for no benefit whatsoever. So on the 1st July we will no longer ship to EU.
No more worries about “lost” parcels, no more customs declaration nonsense, no more postal delays and no more hoops to jump through.
Thanks but no thanks.
another bite of the brexshit sandwich for small business sellers. Maybe Johnson and co can add this to the bits they want to “re-negotiate” since they found out what it means. I swear blind that oaf signed up at the 11th hour without having read a single page of the agreement. Day by day some new issue or problem creeps out. Sometimes better the devil you know, and that holds true to my mind. Personally unlike others i cannot afford to unilaterally cut off 75% of my market so i will keep selling to the EU. And i cannot imagine many real antiques going via a non tracked service, so there maybe the odd lost parcel, but being lost not claimed as damaged it will be insured.
Yeah, and no more EU customers, no more sales, no more revenue, no more bills getting paid ….
Why not stop selling to the UK too; no more invoices to print, no more parcels to pack-up, no more general, well, hassle of doing business.
Having read the email today from ebay for business, it looks like this EU VAT issue might not be a big deal, if you’re VAT registered and using ebay GSP. They’re handling the collection of EU VAT, will automatically have sellers use their IOSS number and deal with the customs procedures for them. All the seller has to do is have their listings include the appropriate VAT rate. EU sales would then be processed at the ex VAT price, goods sent to Ebay GSP as usual.
Gav – the messages being sent by eBay are worded to direct people away from using the Royal Mail (dubious) because of the stated difficulties involved, and onto GSP Indeed, they are signing people up automatically for GSP (also dubious).
Many buyers – myself included – refuse to use GSP due to the huge fees margins they add to share between themselves and their partner(s) as pure profit.
Be interesting to see the Ebay sales that aren’t through GSP for EU.
DDU it is, the EU is no different than any other nation, why are we doing the hard work for them?
What if you’re a U.K. business but not VAT registered as yearly sales are under £60k.
Would I now have to pay VAT to all sales to the EU?
Will eBay automatically deduct this from the sale? How will I be able to claim this back if I’m not a VAT registered business ?
Well.., the UK introduced this on January 1st and is mandatory rather than optional, so at least the EU had the sense to ensure it’s not compulsory. They’ve done many things I don’t agree with over the years but this isn’t one of them.
Paying VAT at the point of purchase rather than import is the way global e-commerce is going and it makes total sense. Avoid and save those annoying postage “handling fees” and just pay the VAT means that by all accounts, sales under €150 will feel the same as pre-brexit for our EU customers.
Paul Middleton – It might seem to make sense, and at least means no “handling fees” if done right, but ecommerce platforms like eBay do NOT want to put in the work to get the tax rules correct and are currently imposing them illegally on items like books and magazines imported in the UK – applying 20% rates unless they are in one of a few categories, I think, but they refuse to add other categories and also charge the tax if an item is listed in two categories only one of which is taxable.
It is a big hot mess… : (
There is still no answer why eBay cannot work with Royal Mail for the EU’s IOSS for any customers who not wish to pay eBay for the privilege. Many of us have thousands of pounds of postage stamps to use and can no longer use them for sales to the EU without the customer being charged VAT twice – so much for technology in 2021, but eBay does not care as they would prefer to drive business to the shipping solution that generates additional profit for them (preferably GSP!)…
We are a amall buisiness sho sell through our website and eBay. We have stopped all EU sales from our website, to much hassle, time. However we still ship through eBay GSP and as far as i can tell if you are vat registered input your price inc VAT. EBay will net it back and if you can make sense of their reporting you can nil your vat return for oversea buyers. Its all a lot of hassle and we dread it if we get a return.
We sell on eBay mainly and Amazon. The situation for us is confused by many mixed messages (and, indeed , the lack of clear guidance. I am no longer VAT registered as I am trading below the £85,000 limit in the UK so do I have to re-register to be able to trade with EU? I do my own mail through local Post Office as I try and support local businesses as well get some exercise! Now it seems that eBay won’t give me an opportunity to write my own customs forms with their IOSS number so I will have to use GSP ( adding to my cost) I sell a lot of stuff to the EU so it is not a viable option simply to close that avenue down. Through my business life I have acted as unpaid tax gatherer for the UK Government but having to do that for the EU (after Brexit) is painful to say the least. PS maybe I will simply reopen my High Street shop and sell to local buyers ( so they can resell the stuff on eBay!)
As a small business, the cost of Royal Mail’s recommended IOSS partner (Deloitte) is prohibitive; £300 registraiton plus £2000 per year, plus the actual taxes and duties. Taxamo is cheaper, because it’s priced on a per-item basis, but still adds enough to make our products utterly uncompetitive for EU customers.
Luckily I saw this coming, and from 2016 I’ve focused on UK and non-EU markets, and let EU sales gradually wither away.
The EU clearly doesn’t want our businesses selling into the bloc, but don’t seem to recognise that losing their trade surplus with the UK could hurt them more. I regard the rest of the world as a far better trade opportunity, have been working hard to source from non-EU suppliers where possible, and have definitely abandoned the idea of my next car being German or French !
Has anyone managed to discover how much PDDP from Royal Mail will cost ?
Royal Mail website says 50p an item:
“For PDDP there will be a 50p per item handling fee payable alongside the VAT and duty we charge back to you.”
What happens if people just do nothing and continue sending like they currently are?
As my cousin used to say — ” tis all bollocks “, The bottom line is that the EU have used brexit as an excuse to try to extract more money out of people’s pockets. As far as I am concerned, NO business registered in the UK can be legally compelled to register with the EU to pay them tax !! — the UK is no longer an EU member — end of story ! As for UK ebay charging EU buyers VAT at point of sale , what legal basis do they have for doing that ? none whatsoever , unless of course UK ebay sales are not provided by a UK registered company. Ebay are really shooting themselves in the foot — can they really not see that their revenue will decrease big – time ? These new tax rules are an hideous , over complicated mess which will be interpreted differently by different EU member countries. Sooner the EU collapses , the better for all of us.
It’s not compulsory (unless you are Amazon or eBay) and it was always coming, nothing to do with brexit.
The UK introduced their version of the exact same legislation on January 1st, at least the EU had the sense make it optional for small businesses. The UK did not!
I know a lot of small US businesses simply stopped selling to the UK as they were forced to register for UK VAT with HMRC if they wanted to continue. I disagree with the EU handling of a lot of things, but making it optional was a good move.
So whilst I appreciate it’s easy to blame the EU for everything, this is simply the way global eCommerce is going in order to protect VAT collection and ensure Chinese sellers don’t under cut the rest of us – I would hazard a guess that a few people moaning about IOSS have had a good moan about Chinese sellers not paying VAT also.
We removed EU shipping from our eBay listings yesterday after getting our first EU sale following the change. To be profitable on eBay, we need to be able to sell at the price listed, and until now have made allowances for the 0% VAT through reduced postage charges. I had hoped that eBay would treat this in the same way that they do ABN for Australia but it seems not – they are paying us the net price only – and charging fees on the price including the EU VAT.
There is no way we can sustain this on our margins. Hopefully they won’t do the same with GSP – although none of our listings are actually showing to the EU via GSP at the moment, so they must be experiencing teething troubles. Is anyone else getting GSP sales?
EU sales over the last 2 weeks have completely dried up. We put this down to not being vat registered. However with the new scheme and once we are vat registered next month we are hoping sales will increase.
@Gemma had a GSP sale to Spain via ebay GSP yesterday. You only receive the net amount from ebay and billed for the net amount.
Thanks Rob. Can’t understand why they don’t treat it the same as the rest of the world. The measures that they had in place for Australia and Brazil etc have been working well until now. They haven’t changed the way that those are treated with direct shipping as yet, so hope they aren’t affected by the EU GSP changes. Hopefully in only having to pay UK shipping, we will still be able to afford to offer this but otherwise we’ll have to remove GSP as well.
Gemma, think it is due to VAT being charged. Otherwise the customer is paying twice in many ways. I prefer the old was as ebay charge more in fees when a different currency and also potential have to pay more to get an item back if buyer tried a item not received case. Would be nice if could charge different prices for different regions or add additional percentage to cover the extra fees.
Rob, there must be something in the the directive that applies specifically to the EU as eBay aren’t taking the same approach globally. The approach taken by the marketplaces effectively means that there is no 0% export to the EU anymore. The prices would always display as including UK VAT where applicable, but it was not applicable to the EU and the extra meant that we could offer reasonable shipping and covered higher fees. The changes now effectively result in an enforced price reduction, so it would indeed be good to have the option to surcharge a percentage on prices for the additional costs involved.