Brexit and Ecommerce how will it effect Irish Ecommerce Site Owners ?
- All your products that you export to the UK will be treated as exports outside of Europe. They will be vat free from Ireland but will have vat applied at point of entry into the UK. This will be the UK rate of vat.
- You need an EORI number ( usually the same as your vat number )
- You must keep the proof of shipping documentation for Irish revenue to justify the non charge of Irish vat on the sale.
- All of your products will need commodity codes for export. The commodity code determines the duty/tariff to be paid on the shipment. A shipment may contain many commodity codes in 1 shipment. Seek the help of an experienced customs clearance professional if not sure about what code to apply to a product. It has revenue implications.
- Some Products will have high tariffs/ duties into the UK. Its good if you can forewarn your UK customers of this.
- Some Product such as Food, Dairy etc will need a health certificate to import into europe from the UK.
- Your UK shoppers will need to be alerted to the liability to customs tariffs and charges before receiving their parcels. They should be alerted and agree to this at the checkout. It will prevent expensive re-import returns.
- Some logistic companies are now paying the vat and the duties on behalf of the shipper and charging these fees at time of booking of the shipment along with a handling charge. This is the only way to avoid a charge for the shopper on the destination doorstep.
- On your site you need to be clear that the price does or does not include the tariffs and charges at the destination address. Depends on your shipping company. Most shipping companies are not taking products for delivery without the taxes and duties paid up front.
- Your shipping company may charge you extra for the customs clearance paperwork at the destination. Your Shipping rates will need to be updated.
- Keep up to date as to the UK’s import laws as the product you are selling may in the future be subject to heavy tariffs or forbidden to be imported.
- The UK are no longer in the EU and will be treated on a country by country basis as is the case when shipping to any other non EU country.
- Develop Policies and Processes for when customers reject the delivery and customs tariffs.
- You need to have your Vat charging set up correctly on your websites on Jan 1st 2021.
- Make sure your UK shippers have custom bonded warehouses to hold deliveries with no duty paid.
- There will be no change with shipping goods to Northern Ireland from the Republic of Ireland. ( 7/12/2020 ) . This may change after 31/3/2021 when the grace period ends. Currently UK is indicating it will extend this period without the agreement of the EU.
- GDPR, there maybe a divergence in laws in the UK on how personal data should be handled.
- Source your product from EU based warehouses where possible so as to protect your supply chain.
- If the value of the consignment is under £135 in value then the seller has to make a vat return to UK HMRC for the full value.
- If the value of the consignment is over £135 in value then the customer has to pay vat and duties to UK HMRC for the full value.
- Distance selling directive no longer covers the UK.
For Shoppers
- When purchasing from the UK your delivery may be subject to a customs tariff and a clearance fee by the delivery company.
- Make sure you are not paying delivery vat on the double. the shipper may have paid the vat already you should not be charged again on delivery.
- Watch out for phising scams telling you to pay a vat bill for a product stuck in customs. You need to keep a track of all your online purchases.
- The delivery company will not hand over the parcel until this fee is paid.
- Their may be storage fees incurred if you decide to pay the fee later as the delivery company have to store the parcel.
- If you refuse the delivery it may be sent back to the online store or you may not be able to get out of the fee. Read your terms and conditions very carefully.
- Delivery Charges from the UK will increase.
- Delivery Times will be longer depending on the time of the year and the readiness of the shipping company and seller for brexit.
- Import threshold before duties and taxes are applied from the UK. €22.00, after this you pay 23% + 2.2% to clear customs on the total value. Shipper my apply a processing fee on top.
How to setup your tax on your website ?
Countries you ship to are grouped into zones on most ecommerce platforms. You will on December 31 midnight 2021, move the UK from EU zone to Non-EU zone in your settings.
You may have setup a UK company to handle this situation if so then you need to send your customers into a separate UK export checkout flow. Or better still spin up a separate UK site and direct customers to this if they put in a shipping address of UK.
You may also need to update the shipping rates to the UK to reflect the additional paperwork required for each shipment.
Northern Ireland should be setup as a separate country in your setup and the 6 counties assigned to this and removed from the UK.
This should then be added to your EU zone. Your shipping rates will need to include Northern Ireland. ( 7/12/2020 )
Setup will differ from platform to platform but the net effect is the same. No vat to the mainland UK and vat to Northern Ireland.
The situation is fluid and generally at time many businesses are ill prepared for this and it will resort in shortrages, more phising and confusion as the rules will change over time.
Some resources.
http://brexitlegal.ie/e-commerce/
Ecommerce Distance Selling Directive UK rules ( UK Government site )
GDPR and Brexit ( Irish Data Protection Commissioner )
A guide to Importing and Export to and from the UK.
Information was derived and created on 7/12/2020
This is a guide and not a legal or official document. Please seek legal and professional advice when preparing for Brexit. Not preparing or doing it wrong may have tax implications for your business.
Updated 22/3/2021