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.
8

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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