Set up BREXIT UK Threshold 135 Pound for Products coming from the EU

Mr-Flo
Explorer
63 8 30

Good Day,

has someone found a solution to only tax UK buyers if their order volume is lower than 135 Pounds (Like 150€)?

Example:

1. UK - Bob buys 1 Jeans: 125€ / below 135 Pounds --> He pays tax within my store (20%) and I ship it to UK with my UK VAT & EORI. (SO he pays: 125 inclusive 20% VAT)

2. UK - Bob buys 2 Jeans: 250€ / above 135 Pounds --> He does not pay tax in my store ( 250 -> Tax deduct 209€ he pays) --> and Tax it on his own behalf when the post man rings. (So he pays 209€ exclusive VAT = EXPORT)

 

THX

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BiancaBlake
Excursionist
34 0 9

Well you can charge him VAT when he buys two pairs of jeans. And report every sales both below and above 135 to HMRC. That way it is always included for them. Does that make sense? Bianca at Euro VAT Refund

-If your sale is above £135 GBP:

Goods above this value are subject to import VAT and duty at customs. No new change to this rule, but the tricky part now becomes to keep track of currency exchange rates at each time of sale. For example, if your product price is $180 USD some days you might be above £135 GBP and other days below. The £135 threshold is based on the intrinsic value of the goods, excluding transport, insurance and other import taxes.

If your imported goods are valued above £135 (or multiple goods with a combined intrinsic value above £135) then you as a U.S. seller still have the option to make your customers pay for VAT to customs. In other words, when you sell the product you inform your customer that they are responsible for importing the goods and have to pay duty + 20% VAT to customs.

Another option, would be for your company to register for a UK VAT number and pay duty and 20% import VAT. This is reported quarterly to the UK and you receive a refund for the import VAT. Either way, it is advisable for companies with large quantities of sales to be registered for VAT in the UK and pay the import VAT (and duties) to customs. That way your customers will not receive an additional payment requirement upon delivery.

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Mr-Flo
Explorer
63 8 30

hi @BiancaBlake 

I am EU Based, as far as I know, I can charge VAT, to the UK now if the order is above 135 Pounds. But I am not obligated to. 

If below 135 I am more or less obligated. 

 

My Q. was; How to set up when the Customer pays X Amount in € (adjustable to € - Pound convergency) to Include VAT 20% at checkout, but if the Order Value (Items only) are above 135, deduct 20% Vat. (All my prices are with VAT)

 

Also, what happens if the value is above 135 Pound and I charge VAT, what I give to HMRC, who pays (duty) at Customs? 

 

If your imported goods are valued above £135 (or multiple goods with a combined intrinsic value above £135) then you as a U.S. seller still have the option to make your customers pay for VAT to customs. In other words, when you sell the product you inform your customer that they are responsible for importing the goods and have to pay duty + 20% VAT to customs.

That makes no sense, You already include VAT in price (you can if above 135), why should they double pay VAT? Or am I reading wrong?

Maybe you mix something up, or I do so. Because on the Duty amount you also pay VAT. So you have 3 payments in Total: 

1. Item + 20% VAT

2. Duty + 20% Vat

or

1. Item + 0% VAT

2. Duty + 0%VAT

3. (Item + Duty) x 1.2 (20% VAT)

 

 

To make It short: Shopify can not do it, right?

I have to charge VAT below 135 Pounds.

Above 135 Pounds I can charge only VAT or Vat and Duty? (The first case, the customer only pays duty at delivery, right?)

 

Best

 

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Chimevault
Tourist
6 0 1

Does the £135 threshold apply to both B2B & B2C?

 

 

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BiancaBlake
Excursionist
34 0 9

  

 

Hi Mr Flo,

There are a lot of factors to consider and since I don't know the details of your business this is not formal advice. But here are my very general comments:

1. If your product is below 135 GBP let's say 100 GBP:

You need to charge 20% VAT at checkout so 100 + 20 = 120 GBP that your UK customer pays to you at checkout. You also need to register for a VAT number in the UK and receive a UK VAT number. The item is shipped you are the importer. The package stops in customs. They see here is a product sold for 100 + 20 was already paid in VAT so you do not have to pay any additional import VAT. You clear UK customs: pay duty (cost to you) and show them your UK VAT registration number. You file to the UK tax authorities and pay them the 20 GBP you collected in VAT. Your profit is 100 GBP minus duty. Customer paid 120 total.

2. If your product is above 135 GBP let's say 200 GBP:

you can certainly do things the same way as above (40 in VAT clear customs duty UK VAT # file to UK and pay 40 to UK tax authorities).

OR

make your UK customer pay the import fees to the mail office or shipping company. Meaning you charge only 200 and no VAT (0 in VAT). You ship the product clearly marking that your customer is the importer (the shipping doc details important). The package stops in customs and the shipping company/broker clears customs and pays the duty and VAT to customs . The shipping company then hopefully can collect the VAT and duty from the private customer in the UK. If you use the postal mail, they will charge on the import fees to the customer before they release the package, just as they do today.

Does that make more sense hope? As you can see this is very simplified answer and certainly does not apply to every situation. Please let me know if you have any follow up questions.

Thank you

Bianca

     

 

 

BiancaBlake
Excursionist
34 0 9

Chimevault my explanation above applies to B2C only.

 

B2B: No VAT needs to be charged if your customer is the importer of record (and it's being shipped directly from you to the company in the UK). If you are located in EU or in U.S. and shipping directly to a company customer make your UK company customer pay the import fees to the mail office/shipping company. The company customer can reclaim this later from the UK tax authorities (they include it in their regular UK tax reporting). There are of course exceptions and also some companies may not want to be the importer for some reasons but those are my general comments.

Thanks again,

Bianca    

 

Chimevault
Tourist
6 0 1

Thanks Bianca, To keep things simple..

Would it be ok to get the UK customer to pay the UK VAT & Duty on delivery,
Regardless of the £135 threshold, And regardless if they are B2B or B2C?

 

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BiancaBlake
Excursionist
34 0 9

Hi Chimevault

B2B: yes UK company can be the importer of record and pay VAT+duty on delivery on orders above and below 135 GBP

B2C:

above 135 GBP private consumer can be the importer of record and pay VAT+ duty on delivery

below 135 GBP No consumer cannot pay upon delivery. You need to charge VAT at checkout and register for VAT # in the UK and report this to the UK tax authorities and pay back the VAT. (However they are working on some new exceptions where in the future mail carriers and/or the shippers might assume VAT responsibilities if they wish to.)

Those are just very general simplified guidelines. If you are a U.S. or Canadian feel free to google Euro VAT Refund and call us in Los Angeles. We are happy to explain more.  

 

 

 

 

 

 

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Chimevault
Tourist
6 0 1

Thanks Bianca,

Going on all that advice..

Does anyone know how these rules work with Shopify

How do we make sure all these rules are adhered to,
when a customer from the UK makes a purchase from an EU Shopify store?

 

 

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Mr-Flo
Explorer
63 8 30

@BiancaBlake Thx, but I already knew that, my question was how to implement, that Shopify automatically calculates that based on the threshold and different currecnies.

Below 135 Pounds, include VAT // Above 135 make a Net invoice. 

You can only select in Shopify include VAT for Uk or exclude. When you work with € or $ good luck.

 

To make a long story short, Shopify cant do that, because it is poorly coded in regards to such flexible things. 

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