Exporting into EU

[Lifestyle18]

Hi,

I have had my ecommerce business for 12 years and mostly sell within the UK. Pre-Brexit about 5% of sales were into the EU. Then everything changed and it got so complicated I just decided to lose this 5% turnover and cease trading into the EU.

However I would like to get my head around how best to do this now. Do most companies pay the taxes and duties for the customer (DDP) and then ship or do most have the customer pay their own taxes and duties on arrival into their country?

If I have the customer pay their own taxes at destination should I put a notice at checkout that they will be expected to pay this and failure to do so will see the item returned to sender at their cost?

Any advice would be appreciated.

Thanks

Bob

 

[DontAsk]

I send everything Royal Mail and let the customer pay. My company is VAT registered so they save on paying UK VAT. If you are not VAT registered then they will pay full UK price and their local VAT.

I have had zero complaints.

 

[Lifestyle18]

I send everything Royal Mail and let the customer pay. My company is VAT registered so they save on paying UK VAT. If you are not VAT registered then they will pay full UK price and their local VAT.

I have had zero complaints.

Hi,

Thanks for your response. Do you let the customer know before hand that they will have to pay their countries VAT on entry through customs? Do you confirm this by check box etc?

 

[japancool]

B2B or B2C?

 

[Lifestyle18]

B2B or B2C?

Mostly B2C but occasionally B2B

 

[japancool]

Mostly B2C but occasionally B2B

If it's B2C, then you're still bound by the CCR, unless I'm very much mistaken - which means the customer can reject the goods for any reason up to 14 days after receipt, and you can only make deductions for reduction in retail value of the goods. They could do a chargeback on their card, if they paid that way.

Someone can correct me if I'm wrong though.

You might consider a solution like Taxamo, which handles EU VAT payments for you (for a small fee per shipment, if it still works the same way that it used to). Other solutions also exist.

 

[Customs Geek]

Hi,

Thanks for your response. Do you let the customer know before hand that they will have to pay their countries VAT on entry through customs? Do you confirm this by check box etc?

It would be good sense to tell your customers that they will need to pay import VAT and customs duty. This will save packets being returned when the customer refuses to pay. The courier or post also tend to charge your customer for collecting the taxes.

Many customers will expect an all in cost and don’t read small print.

You can use the EU IOSS scheme B2C for goods below €150 this means you charge their local VAT. There is no import VAT and import duty isn’t collected for goods below €150.
it would mean registration for the scheme and submitting returns or using a service provider who would perform this service for you.
Alternatively you can ask the courier to invoice you for the local taxes and you increase your prices to cover it.

 

[DontAsk]

Do you let the customer know before hand that they will have to pay their countries VAT on entry through customs? Do you confirm this by check box etc?

It's stated on my website homepage.

 

[DefinitelyMaybeUK]

@Lifestyle18 - you don't say what size/weight parcels you're sending, but the Royal Mail DDP service (they call it PDDP) works out very economical if your parcels are size/weight compatible. Not all EU countries are covered, but there is no €150 threshold like IOSS (but duty still applies if goods are over that) - some countries also have a max weight of 5kg instead of the usual 2kg. It really depends on your order value and the customer expectations you have.

Initially after Brexit, and before PDDP/IOSS were available, sending DDU was invariably met with "we're not going to order from you again" for the countries that have a disproportionately high customs handling fee like Belgium and Denmark. Even now, despite supporting PDDP & IOSS, some customers are still wary of ordering due to historic mis-handling by their country's customs service - Italy springs to mind.

Well done to anyone whose customers are happy with a DDU service, but we now only use it for B2B, or B2C using a courier (i.e. too big/heavy for RM) and IOSS can't be used (i.e. over €150). Be wary of sending DDP with a courier as you'll typically pay an extra originating fee (e.g. £7.50) then also incur the usual in-country handling fee (maybe €15-€18) on top. Depending on your order value, to absorb this yourself may not be be possible, and you may consider it better for the customer to just pay the in-country fee their end, with prior warning of course.

 

[DontAsk]

Initially after Brexit, and before PDDP/IOSS were available, sending DDU was invariably met with "we're not going to order from you again" for the countries that have a disproportionately high customs handling fee like Belgium and Denmark. Even now, despite supporting PDDP & IOSS, some customers are still wary of ordering due to historic mis-handling by their country's customs service - Italy springs to mind.

I've not found that, and I've heard of too many tales of DDP shipments being mishandled and being assessed for duty and VAT. That, and the fact the RM scheme doesn't cover all of the countries yet, has put me off.

Be wary of sending DDP with a courier as you'll typically pay an extra originating fee (e.g. £7.50) then also incur the usual in-country handling fee (maybe €15-€18) on top.

I tried sending a B2B package DDP by Fedex, when they had special offer for new accounts recently. They completely ignored the DDP part and charged the recipient. Luckily they haven't (yet) tried to charge me for the duty, etc. I won't be using them again.

 

[DefinitelyMaybeUK]

I've not found that

I'm sure it all depends on actual order value and perceived value to the customer - even though you can warn customers that DDU handling fees will apply, a €24 postal handling fee to a Belgian customer on a £20 order is never going to foster repeat business unless there is extenuating circumstances. Touch wood, but so far no issues have cropped up on the RM PDDP service. We did have a 2 week IOSS customs delay to Sweden a while back, but PDDP is available to there now so fingers cross it will be as smooth as the other countries.

I tried sending a B2B package DDP by Fedex

Did you mean B2B? If so, I assume you're absorbing the VAT payment yourself, as I don't believe the recipient business would be able to reclaim the VAT paid if it was invoiced as such.

 

[sdob]

I've done many DDP shipments in the past, and would advice against sending the default way (DAP).
Never done it through Royal Mail - always used Fedex and UPS. Just open an account and get them to activate DDP. The rates are good if you have some kind of volume.

B2B customers tend to be ok-ish with DAP - but B2C customers do not want to be confronted with customs regulations as they will receive +/- 35 euro surplus on receiving the parcel.

 

[DontAsk]

Did you mean B2B?

Yes.

If so, I assume you're absorbing the VAT payment yourself, as I don't believe the recipient business would be able to reclaim the VAT paid if it was invoiced as such.

OK, maybe I misunderstood. In the end I re-issued the invoice without the VAT element, and all were happy. TBH I wish that customer would disappear, as they are always tardy payers, even without issues like this.

 

[TeemuEAS]

FYI, Taxamo is winding down their IOSS service, ending December 2024. So I hope you did not end up with them.

We do serve already thousands of customers of all sizes with cross-border services. If you are still looking for best un-brexit help in 100% compliance, do reach out to us at www.easproject.com