Adding VAT for an EU Shipment

[The Soup Dragon]

I was talking to a customer today who was asking about VAT if they bought from us.

I said maybe we could send them our products and send them DDP ( France ) and add a line on their invoice for prepaid VAT at 20%... is this plausible?

I also said that maybe we could send DDP and make the shipping fee reflect the extra VAT element that DDP would cost us.

Thoughts appreciated

SD

 

[Scalloway]

If you are exporting goods from the UK you do not charge VAT.

 

[The Soup Dragon]

If you are exporting goods from the UK you do not charge VAT.

Hi Scalloway

I knew I didn't explain that very well.

So I send to my customer in France and don't charge VAT (T0) and they then get a VAT bill etc from customs on their before delivery will be made and this they don't like.

I can send DDP from my end and I end up paying their VAT element for them which I don't get back BUT they get a nice easy smooth delivery without delays. I can then inflate my delivery costs to cover this extra cost and everyone is happy.

 

[DefinitelyMaybeUK]

I can send DDP from my end and I end up paying their VAT element for them which I don't get back

Why don't you get paid back? It's normal to add an amount for the country vat at the appropriate rate for DDP/IOSS order - this is classed out of scope for UK vat. The amount should be the importing country vat due on the combined goods & freight charges. Don't inflate your freight value to include the vat due, as customs will calculate vat on this and you will be billed more then necessary ?

People due expect to pay vat but what they don't expect is the potentially high disbursement handling fee - for couriers this can easily be £15+ or equivalent.

 

[DefinitelyMaybeUK]

Forgot to say, if you're shipping DDP then the order could technically be over €150 so duty may then be applicable too (depending on tariff code / country of origin) - if so you need to also factor in an invoice line for this and the import country vat calculation then also takes this into account, i.e. 20% of goods + freight + duty in the France example. If you're using IOSS, then it's goods are limited to €150 so duty never applies. Couriers will typically proportion any duty against the freight charge too, so not just the actual goods value - but that may be a calculation too far

 

[The Soup Dragon]

Forgot to say, if you're shipping DDP then the order could technically be over €150 so duty may then be applicable too (depending on tariff code / country of origin) - if so you need to also factor in an invoice line for this and the import country vat calculation then also takes this into account, i.e. 20% of goods + freight + duty in the France example. If you're using IOSS, then it's limited to €150 so duty never applies.

Always over Euros 150

 

[Customs Geek]

Hi Scalloway

I knew I didn't explain that very well.

So I send to my customer in France and don't charge VAT (T0) and they then get a VAT bill etc from customs on their before delivery will be made and this they don't like.

I can send DDP from my end and I end up paying their VAT element for them which I don't get back BUT they get a nice easy smooth delivery without delays. I can then inflate my delivery costs to cover this extra cost and everyone is happy.

Hi Soup Dragon
You say in later post that everything is over €150 so neither IOSS or the duty exemption applies.

You say you wouldn’t get the VAT back however you would in effect get the French VAT back as it would be included in the price your customer pays to you.
You can then agree to sort out payment of taxes with the courier.
The courier pays the Taxes to French Customs.

Assuming this is a consumer not a business then they are just paying the local VAT as if they had purchased in store locally.

The customer shouldn’t expect not to pay VAT (and import duty if applicable) one way or the other. So they pay tax either at import or through the price they pay, just as if they had purchased in a shop.
as you say it would give a better customer experience if the price they pay to you includes everything.
You will therefore need to confirm the duty and VAT and any other charges that may apply so you get your costs right .

 

[Zammo]

I was talking to a customer today who was asking about VAT if they bought from us.

I said maybe we could send them our products and send them DDP ( France ) and add a line on their invoice for prepaid VAT at 20%... is this plausible?

I also said that maybe we could send DDP and make the shipping fee reflect the extra VAT element that DDP would cost us.

Thoughts appreciated

SD

Hi Soup Dragon,

Having read the other replies I am making the assumption that your customer is not VAT registered and thus reclaiming the VAT is irrelevant to them.

If you factor the freight, VAT, and Duty costs into your charges to the customer then you are not losing out financially. VAT rates in Europe change by country so you need to check the rate you should charge.

In the past, I have used Europa Worldwide to ship DDP to Europe, which was for pallet loads, but they might offer a box service too. Their service is called Europa Flow.

If you are shipping to Europe regularly It might be worth using a third-party logistics firm to hold stock in a European location. I would recommend fulfilmentcrowd.

All the best.
Z