I am a new seller based in the U.K. and I have recently opened my store for pre-orders of an in-demand product. I have (perhaps naively) offered worldwide shipping and have started to get orders from the EU.
I want to know the best way to deal with import duty, taxes and VAT.
The price of a single item on my store is £130 (we have a 10% discount as well which most people are using) and we are charging £8 shipping to the EU (we plan on using a 3PL).
The goods are manufactured in China, shipped here to the U.K. and then we use the U.K. as the base to ship to our EU customers.
Also, as we are a new business we are not VAT registered.
I have no idea what the best way of dealing with taxes and VAT is. Do I charge duty at checkout? If so how do I calculate that and offer it?
do I just let the buyer pay duty and taxes? If so then how do I make them aware of these costs?
Better a late answer than never, I hope! So hi Kbbr!
First of all make sure the customer experience is good, so make sure you are providing a single action purchase. Any post-purchase fees or actions reduce the experience and increase returns significantly.
The EU has a new VAT scheme which supports your operating model: IOSS. This allows you to collect VAT at the checkout and file a single report to EU tax office where you registered. You do have to be incorporated in UK in order to be able to register for IOSS. The IOSS also requires you to have an Intermediary. The same IOSS would allow you to also ship the goods directly from China which would remove the need to import the goods first to UK.
Hi, I have the same problem. Can you please tell me, did you manage to solve it? We are also a young small business and do not want to register VAT in the UK and IOSS.
Can you please tell me what is your experience?
Have you registered or are you selling without registering?
In that case, how do you calculate tax? All taxes are paid by the client? And how do you generate reports?
If you are a UK based company, you don’t have to register for VAT until you exceed a sales threshold of 85.000£ . The it becomes obligatory to register for VAT. Until that, we don’t recommend you do as it does create more burdens.
Selling to EU you really have 2 options: Delivery Duty Paid (DDP) where you collect taxes and duties at checkout. Your logistics partner needs to handle that, I recommend spending some time shopping for a good partner. It is more suitable for more expensive goods due to the costs, however.
The cheaper solution is only applicable for goods below 150€ and that requires IOSS. IOSS does not have to be cumbersome, we do our best to take the pain away. From registration to report generation and filing. EAS IOSS solution is logistics agnostic so we always recommend starting with postal.