Hello, my name is Arda.
I am working on my Shopify store, where I want to sell clothing to customers in the United Kingdom. I live in the Netherlands, and the clothing is shipped directly from my supplier in China to the customers (so I do not hold any stock myself).
I would like to know exactly what I need to arrange to do this in a correct and legal way. I have no experience with this, so I would appreciate clear explanations about:
Taxes: Do I need to register for taxes in the United Kingdom (for example, VAT)? How does this work if I live in the Netherlands and the products come from China?
Customs and import: Do I need to arrange anything for the import of clothing from China to the UK, or will my supplier handle this?
Privacy and customer rights: Are there rules I need to consider about a privacy policy, return rights, or terms and conditions for customers in the UK?
Practical help: Are there easy ways or tools within Shopify to set all of this up correctly (for example taxes, shipping costs and return policies)?
In short: I want to know my main obligations as a Dutch entrepreneur selling to customers in the UK via dropshipping — both legally and fiscally.
I would really appreciate it if someone could explain this to me step by step and in simple language.
The UK has a GBP 135 threshold for imported goods. Anything under the threshold requires you to register for VAT, and you need to do so before you start selling. If you’re only ever going to have orders over the threshold, then it’s up to you whether you register or make your customers the importer of record.
Making your customers the importer of record means your customer handles all the customs fees and import VAT. It’s not the best customer experience - people hesitate to buy if they think they’ll get charged extra at the border. If you want to be the importer of record, you’ll need to register for VAT in the UK.
Brexit makes it a little more complicated - Northern Ireland is still in the customs union for goods. So if you’re not registered for VAT in the UK and don’t want to make your customer the importer of record, you’ll need to register for IOSS to ship orders worth less than GBP 135 to Northern Ireland.
As for getting all this sorted, the easiest way is probably through an agent (like us at SimplyVAT!), as they handle all the returns and stuff handled for you. We have a Shopify API that connects your store to our VAT software, so it’s even easier.
I hope that helps! We have a page on our site about how UK VAT works for ecommerce brands if you wanna do some more reading: UK VAT - SimplyVAT
Hi @ardy078
Register for UK VAT if you store inventory or surpass distance selling thresholds; with direct-from-China dropshipping, make sure your supplier manages customs or use Delivered Duties Paid, if not you are the importer of record and responsible for VAT and duties. Draft UK-compliant policies, apply tax/merchant solutions (TaxJar, Quaderno), and seek advice from a UK VAT expert today.
As someone working in this industry, I can answer your questions:
Tax Issues: If shipping from China to the UK, customs duties are already included in the shipping cost. You only need to pay the shipping fee; you don’t need to do anything else.
Customs and Import: This is also a logistics issue. You just need to find an experienced dropshipping agent who will handle the procurement and logistics (including customs duties, etc.) for you.
Privacy and Customer Rights: You need to include this in your website. Generally, since you are based in the Netherlands, if a UK buyer involves refunds or returns, I suggest issuing a refund directly. Returning goods from the UK to the Netherlands can incur shipping costs far exceeding the product’s value.
UK actually does mandate the UK VAT registration for distance sellers. In reality, however, it is not enforced. UK VAT registration does provide a similar simplification for low value consignments as IOSS does for EU. And since that removes the need for shipping partner to collect VATs and customs processing fee from customer, it does make a lot of sense.
The threshold is the mentioned £135, for IOSS it is 150€. In bother regions that is also the duty threshold, no duties are applied for below threshold shipments. All of the available shipping companies would be able to handle the LVC (low value consignment) clearance without issues. Talk to your dropshipping partner about possible DDP.
Further, there are a few more issues to discuss with your dropshipping partner if they do not have a full integration to Shopify. First, ask them if they know how to handle the UK VAT number. They have to understand that it identifies the VAT liable party and they cannot borrow your number to their other clients. Naturally they have to have the ability to add the number to the shipping data.
Second, ask the how they receive the ACTUAL sales data. Often they use the value they charge you as customs value, or even something completely imaginary (we have heard some outrageous operating models) and you would not receive the information automatically. Since Shopify or EAS Project collect data from checkout, the data discrepancy will result in questions you want to avoid.