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Discussion in 'International Business' started by Graham Wharton, Apr 20, 2021.
Contacted BEIS. They told me to contact HMRC. Typical. It's like nobody knows.
It seems pretty clear in-so-much as it's better waiting for HMRC to get going. As per the Gov link there will be a portal in the UK to sign up and do it yourself without the need for an intermediary, it just won't be ready on July 1st. I'm going to hold off until the further guidance is made available and then decide.
Thanks! That might be the best option indeed. Too bad it won't be ready before the 1st and there are no more details at this time.
Why don't different governmental bodies know this?
If you aren't ready for IOSS before 1 July, then presumably you can only send DAP or sell via Amazon/Ebay which may not be an option. And who knows when the UK government etc. will eventually produce a way to go direct with IOSS. Given their track record, could be a long time.
On that basis, I have over the last few weeks contacted 17 different companies offering an IOSS intermediary service including the obvious ones like Avalara/Avask as well as smaller companies in the EU. Some did not respond. Several told me things that I know are incorrect which did not inspire confidence. 3 weeks ago, most could not give a price but now many have got their act together. Highest quote is 4800 euros per year including registration/filing (KPMG). Lowest quote so far is: Registration + 12 months of IOSS returns: 1500 Euros.
Now I'm in a dilemma, if we don't start the process now, we aren't going to be ready for 1 July. But if we do sign up now and then discover just before 1 July that we could have gone direct or the deadline is pushed back, we will have wasted 1500 Euros. Joy.
Thanks for that! Well done on contacting all those companies. Even 1500 Euros is too much, to be honest. Especially if, as you say, it ends up being unnecessary.
You can still send after 1st of July but it just means the customer may have to pay the vat/import duties. I say 'may' as i cannot see how they will stop every large letter/small parcel with customs value say under £50 and get the customer to pay - certainly not immediately!
So I will be using Franking and CN22/CN23 as normal with EORI number and Tariff completed as I do now and as now, hopefully they will get through and if not the customer pays the VAT etc.
Yes, but that's a TERRIBLE customer experience. VAT + especially any handling charges can be high and difficult to pay.
Yes I agree - sort off - with time I suspect the EU will get accustomed to VAT etc. To me it is no different to USA and I sell mainly to USA so any charges are not putting my USA customers off! But its one of these 'time will tell' I may have to do the IOSS thing if sales to EU stop completely. Even from an accounting viewpoint its easier to keep off of IOSS I suspect!
VAT itself is not a problem. It's the handling charges for collecting it, which can be from £10-20, depending on the country/courier. IOSS would prevent this, as VAT would be prepaid. For higher-priced goods, these handling charges may not be such a big deal. But if you order something that's £20 and then you have to pay £4 VAT + £20 handling charge when you receive it, you would not be happy.
Yes I agree but I've not had the issue in USA, Canada, French West Indies, Australia etc. so I am hoping that it wont be an issue in EU! If it becomes an issue I will change to what's best, but as from 1st of July I wont be changing anything!
It will be an issue in the EU, as there's now a €0 threshold for importing commercial goods. In the USA, it's $800 before you have to pay any import taxes/duties.
I contacted London Business Hub's Brexit Panel for advice. Their response:
"Apologies for the late reply, can you please explain what IOSS is?"
It's a complete mess.
No one knows anything.
There is a mutual assistance agreement between particular countries in the EU and the UK, as far as I know, such as France where we have a VAT reg (Google 'Do I need a VAT fiscal representative after Brexit?' and go to first link by Avalara) but there are so many conflicting messages. One French tax agent said to me - you don't need to use an intermediary on the phone due to Mutual Assistance - and another said you absolutely do, they say: 'many companies in UK think that they don’t need to take an intermediary because of EU-UK Mutual Assistance Protocol but this is false.
This protocol is not valid because the recovery assistance threshold is not the same as that of the VAT-EU protocol. Our ministry has confirmed us recently.'
On the French website, it says that people who have a French VAT reg (and I assume this is the same for other EU countries) can apply for IOSS via their French Tax portal. They need to request a special code which activates a service on their portal, that takes 2 weeks to arrive. Once activated, they can use this service to apply for IOSS.
I am not aware of any way to directly register via UK at this time. As far as I know it has to be done via 1 member state tax office, ideally where you have an existing VAT reg.
The DIT, HMRC, UK Gov and everyone else doesn't have the foggiest!!
The only people who tell you that they know what's going on are expensive agents like Avalara or SIMPLY VAT who just quoted me £175 / month to fill in a few numbers that I will have to provide to them (a 10min job.) And £345 for the registration.
It's all nonsense. I don't care if you're Deloitte, KPMG or PWC - Even the experts imo do not know because all of this is new info, and much of it is murky and unconfirmed, so they are learning at the exact same pace as us, as and when info becomes clear. They have no 'consultancy expertise' to offer us imo. It's all one big scam.
The EU needs to get its act together - they've left this right to the last minute.
I wish they would just put out a crystal clear answer about whether or not UK companies need or do not need an intermediary when fulfilling cross border from UK to EU below €150, and whether or not mutual assistance agreements apply or do not apply for us.
Complete nonsense. Brexit is going so well!
I'd been worrying about that since I got the reply from the Irish Revenue that intermediaries were required for countries without an MAA of 'suitable scope' or whatever it was they said. Between EU countries I think the threshold for assistance is 1500 euro, and it's the same for Norway-EU (and no intermediaries needed for Norway businesses). But the UK-EU MAA threshold is £5000.
So if the UK Gov has signed an MAA that isn't of suitable scope for the IOSS, why isn't anyone shouting about it beyond on forums like this? It would be totally negligent for the UK Gov to fail to secure unrestricted access to the IOSS, despite signing an assistance agreement on VAT.
But at the same time, NI businesses will be registering with an HMRC OSS, and HMRC talks of a UK IOSS portal coming eventually (which NI businesses don't use). Is the UK-EU MAA of suitable scope for those, but not for UK businesses to register without an intermediary? Who knows!
Checked in with Ireland Revenue today and still got a negative response.
The current situation for UK traders is that Norway is the only third country with which the Union has concluded an agreement on mutual assistance therefore, it is necessary for UK customers to appoint an EU established intermediary to register for IOSS and use the scheme at this time.
Negotiations are ongoing with the EU Commission and the UK so this may change in the future.
It really is a complete mess.
I 100% blame the UK government for this. The deal we got sucks and instead of making sure that small businesses have clear guidance on IOSS/exports, they don't seem to be bothered. Not ONE person that I have contacted from the government, including my MP, has said: "Oh, wait, this is serious - I will get right on it and we will have a clear answer shortly."
While we're waiting for answers...
- Why the €150 limit?
- How is this calculated (goods inc VAT but before postage, for example)?
- What would you do with orders over €150?
150 EUR is the Duty Free threshold.
Shipments above 150 EUR Intrinsic Value require duty to be collected at the border, so they say not to collect VAT at the checkout as the VAT + Duty will be collected at the border.
Shipments below 150 EUR Intrinsic Value do not require duty to be collected, so if VAT is collected at the checkout, there will be nothing to collect at the border and the items will breeze through.
The Intrinsic Value is calculated by summing the ex-vat sale price of all items on the order including removing any discount. The Intrinsic Value DOES NOT include any shipping, freight or insurance costs. It is the "Intrinsic Value" of the goods. Not the order total. Search for the definition of "Intrinsic Value IOSS" on google. Sorry, I dont have enough credit to post links. You should be able to find the EU docs to back up this information via google.
It is not the same calculation as when determining the amount of VAT you should collect, which SHOULD INCLUDE shipping, freight or insurance costs.
For orders with intrinsic value above 150 EUR, just do not collect any VAT. Do not collect UK VAT. Make sure your commercial invoice contains a breakdown of the goods value, shipping costs, and total order value. If your goods have "Country of Origin" the UK, and you have the necessary evidence to support it, include an Origin declaration on your commercial invoice stating that the goods should attract preferential duty rates and include your EORI number to ensure they go duty free. In this case, VAT would still be collected at the border even if no duty is due, due to preferential duty rates.
I hope this helps.
That's brilliant, thank you so much, Graham!
So, if the order looks like this, all prices ex any UK/EU VAT:
Item A: £10
Item B: £30
EU duty-free amount: £10 + £30 = £40. The £5 discount is disregarded?
But EU VAT is charged on: £10 + £30 - £5 + £10 = £45
Is that correct?
No, you include the discount.
The intrinsic Value would be 35 EUR
And VAT would be due on 45 EUR
On my store, I do all my sales in GBP. Once a month, I will download the exchange rate from the EU website (InforEuro) and use this to convert the 150EUR into GBP. Currently about 131 GBP. Then I do the threshold comparison against this number in GBP. And any VAT calculations I do in GBP at the relevant EU rate.
At the bottom of my commercial invoices which are all in GBP, I will have an EU VAT summary section where I state the exchange rate used, and convert the Total Ex Vat, VAT Charged and Grand Total into EUR for information, and will include my EU VAT Number when I get it.