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

Accounting & Taxes

Topic summary

EU-based sellers are struggling to implement the UK’s £135 threshold rule for post-Brexit VAT collection. The core issue: Shopify cannot automatically adjust VAT charges based on order value and currency fluctuations.

The £135 Rule:

  • Below £135: Sellers must charge 20% UK VAT at checkout, register for UK VAT, and remit collected taxes to HMRC
  • Above £135: Sellers can make customers pay import VAT and duty upon delivery instead

Technical Challenges:

  • Shopify only allows enabling or excluding UK VAT globally, not conditionally based on order value
  • Currency conversion between EUR/USD and GBP complicates threshold calculations
  • No native reporting exists to separate sales above/below £135 for compliance

Key Clarifications Provided:

  • The threshold applies to B2C only; B2B customers can be importers of record regardless of value
  • For orders above £135, if sellers charge VAT anyway, they must still register and report to HMRC
  • Some sellers find orders above £135 barely profitable due to 12% import costs under DDP shipping

Current Status: The discussion remains unresolved. Multiple users seek workarounds or third-party apps, as Shopify’s “Registration based tax settings” don’t fully address the conditional VAT calculation requirement.

Summarized with AI on November 11. AI used: claude-sonnet-4-5-20250929.
6

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

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