Dropshipping Beauty Products from EU to UK

[Szczepan Piekutowski]

Hi Guys,

I am bit stuck and I need help. I searched half of internet already. The subject Relates Beauty products which are connected to:

• VAT
• EORI Number
• Responsible Person (RP) for beauty products

I have been working on a website https: // colwayinternational . online which is a doorway for a company to UK market.

Until Brexit the scenario was as follows:

1. I make a sale via the web
2. I make a purchase at Polish supplier
3. I send parcel directly to the customer
4. Invoice is issued digitally from my website.

All purchases less than 135 GBP


After Brexit it is as follows:

I have to register for VAT and charge VAT at the POS - no problem.

Current states of affairs with customs:

1. Invoice has to be attached to the parcel i.e. cannot hide cost of purchase from the customer.
2. I might have to send parcel to a sorting place in UK and exchange invoices
3. Send parcel from UK base to the customer.

Questions that arise:

1. Does anyone know whether invoices attached to the parcel will be taken by customs? (If there is no invoice inside the parcel then we are good to go if they do).

If YES -> Parcel is sent directly to customer from Poland - however customs knows that I have purchased the product as a business (dropshipper).


IF NO -> Parcel sent to my warehouse for re-invoicing and forwarded to customer with printed UK invoice.

Questions:

Do option nr 1 (YES) option nr 2 (NO) makes me an importer and I need to get EORI number?

Do option nr 1 (YES) option nr 2 (NO) require a Responsible Person registration in the UK ?


At what point am I becoming an importer? With dropshipping option can I state that I make a purchase on behalf of the customer?

Thank you!

 

[jay2021]

Unfortunately there isn’t information for dropshippers, all seems confusing and couriers seem to be just as confused.

 

[Szczepan Piekutowski]

Yeah. It will be very difficult now to hide the cost of goods sold. I have decided that parcels will have to come to me and I will re-invoice them accordingly and remove CN22.

Still a Responsible Person issue is outstanding as I have been told that even if I am facilitating a sale as a dropshipper then RP is required even if I am not touching goods.

This is me being a distributors.

I am now in talks about RP with the supplier and we will see what will happen.

 

[Mr D]

Have you thought of customer paying at the point of purchase?

 

[Szczepan Piekutowski]

Yes - VAT would be added at Point of Sale so on my store.

Dropshipping is not an option atm due to CN22, invoices and cost declarations. Parcels will have to be relayed by me which of course adds extra cost to shipping.

 

[Mr D]

Yes - VAT would be added at Point of Sale so on my store.

Dropshipping is not an option atm due to CN22, invoices and cost declarations. Parcels will have to be relayed by me which of course adds extra cost to shipping.

A cheaper option may be buy wholesale - tends to be cheaper than dropshipping price - plus of course no dropship postage. Then send out the order when buyer orders it. Your invoice, your timing.

 

[Szczepan Piekutowski]

Of course. Then I become an importer with bulk quantities etc. The route I don't want to go. I would have to become a distribution centre for the company and so on.

The difference with this company is that they are not traditional B2B. These guys are doing Network Marketing with big % discount for distributors. Before Brexit it was very easy. I would purchase products on my name and send it to the customer. Now cannot do that due to CN22 and Invoice issue as well as RP.

Option to purchase wholesale is there but its an effort to arrange that and it is outside of their online system which is not ideal.

Yes I know what you might say - double VAT as I purchase with Vat from Poland and add VAT here.

 

[Mr D]

Of course. Then I become an importer with bulk quantities etc. The route I don't want to go. I would have to become a distribution centre for the company and so on.

The difference with this company is that they are not traditional B2B. These guys are doing Network Marketing with big % discount for distributors. Before Brexit it was very easy. I would purchase products on my name and send it to the customer. Now cannot do that due to CN22 and Invoice issue as well as RP.

Option to purchase wholesale is there but its an effort to arrange that and it is outside of their online system which is not ideal.

Yes I know what you might say - double VAT as I purchase with Vat from Poland and add VAT here.

Still usually bigger profit to be made as a retailer of products purchased wholesale than network marketing.
Never mind the saving on the postage side.

Brexit is over with, have to deal now with UK outside EU. Figure out what can work and what cannot.

Never thought of double vat. Here we usually pay vat on the purchase of goods then when sold (if vat registered) then charging the buyer vat - overall UK business will be revenue neutral for vat on stuff they sell when registered.
It's the end user paying.

 

[Szczepan Piekutowski]

True that but Wholesale is not what they go for. It s a special requirement to do that with them however possible. Also if I buy through the network we are also benefiting from points system and rewards etc which could bring more benefits than just traditional B2B import.

Double vat - if I purchase from EU with VAT (not wholesaler) and then sell in UK I have to add UK vat - this means double vat = more expensive products.

I just need to know about Representative Person and then I will be good to go. I will deal with the rest - Vat, Import duty whatever.

I have got whole website ready with marketing awaiting to be launched.

 

[Mr D]

True that but Wholesale is not what they go for. It s a special requirement to do that with them however possible. Also if I buy through the network we are also benefiting from points system and rewards etc which could bring more benefits than just traditional B2B import.

Double vat - if I purchase from EU with VAT (not wholesaler) and then sell in UK I have to add UK vat - this means double vat = more expensive products.

I just need to know about Representative Person and then I will be good to go. I will deal with the rest - Vat, Import duty whatever.

I have got whole website ready with marketing awaiting to be launched.

Then discuss the vat with the polish tax authorities. See what plans they have come up with in past 4 years to avoid double vat.
Oh and you add UK vat by being vat registered, nothing to do with who you buy from or where you sell it.

 

[Szczepan Piekutowski]

For them to send with no Vat they have to send outsite of their system of operations and I have to become a wholelaser. They can mark a parcel as export parcel and then they can send it with no vat.

No company will do it for several parcels a week to start with. It would have to be bulk.

So VAT paid in Poland.

Yes cos of new law I have to do VAT at POS so I add UK vat on top of PL vat unless supplier sends parcel out to me as to wholesaler for export which is unlikely.

Paying double vat is worth it evem if I cover part of it from profits. Netwoek Marketing benefits are greater than this loss.

That is however another subject. Just trying to sort ou Reoresentative Person first before continuing the project.

 

[JRatron]

Double vat shouldn't be a problem if you can register for VAT in Poland? Then you can claim it back.
Sending with regular post service means you need a CN22 and the invoice details are on the outside, but if you book it on with a courier service, send it DDP where you pay the import costs and you provide digital commercial invoice, then the customer doesn't see anything when they receive the package. Of course it's a more expensive service so might not work out for individual drop ships.

Drop shipping is a real casualty of the Brexit situation for us and many others. We used to do a lot of business back and forth with Europe, both drop shipping for our trade customers and getting orders drop shipped from our suppliers. That's now pretty much died off overnight until we work out some way to make it practical.

 

[Szczepan Piekutowski]

Once I will deal with Representative Person then I will move onto taxes and stuff. I will also need to integrate my e-commerce site orders with my accounting software, probably open separate LTD company etc.

Drop shipping no more - however just wait until "Dropshipping forwarding services" will pop up in next few months where they will de-label and re-invoice packages for customers. I am strongly considering launching that kind of business as well.