Receiving goods from the EU post Brexit - no deal

[Fordulike]

Please correct me if I'm wrong. As it stands, when buying goods from a country in the EU, they add tax to value of the country's particular VAT level in the sending country.
Then when it reaches the UK, there are no more taxes to pay, because we are currently part of a free trade agreement.

If we bomb out without a free trade deal, then we trade on WTO terms.

The question is, would the goods be taxed at source at the county's VAT rate, then taxed again when it goes through UK customs, at 20% plus associated custom's fees?

Or, would the vendor sell the goods at zero VAT rate, then the goods get taxed at UK rate plus custom's fees when it reaches the UK?

 

[oyster]

As I understand, VAT is a domestic tax. Companies which export outside the EU (should) do so without adding VAT. Though within the EU things are much as you describe.

There are, however, several issues.

Some companies might just not bother to knock off their calculated domestic VAT even if they are exporting. I suspect this is most likely among smaller companies which don't do a lot of exporting.

Some companies might just decide not to export to the UK.

Some companies might go for schemes in which they charge UK VAT and remit that to the UK government. Such goods will have some sort of barcode (or whatever) to indicate that VAT has already been paid. This will require substantial effort by (potential) exporters.

The existing low value consignment relief (£15 limit) will disappear entirely. (I think the EU is also abolishing that.)

All other goods will arrive and go through customs clearance. I have read a minimum charge of £11 via Royal Mail rather than the current £8 - possibly more through other shippers. Even if the value is just one penny. This is likely to represent a considerable increase in the workload of the shippers and HMRC. Hence, expect delays.

I expect actual and suspected false declarations of value will be challenged far more rigorously than hitherto. Though that might take a while to happen.

As for digital goods - I have no idea.

No idea if there will be any way for UK exporters to register for VAT in EU countries to allow pre-payment of VAT. Probably way over the top for very small exporters. And probably would be necessary to register in each and every individual EU country.

 

[Benjahmin]

'Imagine there's no countries, it's easy if you try'
I'm sure the wonderful politicians will find an answer to the problem that they created in the first place. So, once again, proving themselves to be indespencable. And I'm also assured that whichever government of whichever stripe or nationality will make an absolute pigs ear of it, so giving themselves more problems to solve for our benefit.
Cynical? Me? Nah, just old enough to to have seen behind the wizard of Oz's curtain a few times.

 

[oyster]

the wonderful politicians

In the famous and ancient phrasing of recipe books: First catch your wonderful politicians...

 

[flecc]

Or, would the vendor sell the goods at zero VAT rate, then the goods get taxed at UK rate plus custom's fees when it reaches the UK?

As above. You are correct on the current arrangements since we are considered internal to the EU as one country, but on WTO terms we are just another outsider to everyone else so not subject to their domestic taxes. We pay tariffs instead plus our own VAT on arrival.
.

 

[Fordulike]

So, am I reading the current situation correctly?

On receiving purchases from an EU country after 1st Jan 2021, there are no custom's duties to pay, but we are liable for 20% VAT, plus whatever the courier/Royal Mail charges to process the paperwork.

 

[Benjahmin]

Only thing for sure Fordulike is that, with thousands of pages to read through, there will be differing interpretations and applications and interminable arguements. The lawyers must be rubbing their hands with glee. Remember those thing called, 'Job for life'?

 

[Fordulike]

The situation is pretty pants like, as I don't buy all my bike gear from China. I tend to use German vendors for purchases, as they are fast and reliable. Now maybe not such fast delivery, since the goods need to pass through the custom's system.

 

[oyster]

The situation is pretty pants like, as I don't buy all my bike gear from China. I tend to use German vendors for purchases, as they are fast and reliable. Now maybe not such fast delivery, since the goods need to pass through the custom's system.

Agreed - though if there is a method for the German exporter to prepay VAT, the delay might not be appreciable. Can't see it being in place yet a while.

Also, if the EU imposes tariffs and the items are imported from somewhere like China, the German supplier would, in time if not immediately, raise their prices to cover the tariff.

That tariff charge would not, so far as I can see, be refundable even if the item is then exported to the UK. Indeed, I am hopelessly out of my depth considering what would happen in any of the likely cases:

EU charge tariff - UK doesn't charge tariff
EU charge tariff - UK also charges tariff
Eu doesn't charge tariff - UK charges tariff

 

[Fordulike]

I've read countless arcticles, mostly from the government, stating how businesses and citizens need to be prepared for 1st Jan 2021. But I can guarantee, the customs system isn't anywhere remotely prepared for the onslaught they're going to receive from all the extra European mail

 

[Danidl]

As I see it, any EU exporter will charge their countries domestic VAT on their sales..anywhere ,to any customer who is not commercially registered. So your hi fi kit coming from Germany using eBay or Amazon Gmbh to a home in the UK will appear with VAT included. And your visa bill will include that VAT and whatever carriage charge is applicable. The UK has concluded a FTA ,so there is no added tariff. If you are are a commercial operation in the UK, and get invoiced sales, the VAT would not be charged.
Since the German company has the documents to prove exemption. That basically means no difference than current practice. If a UK exporter wants to sell Smoked Salmon grown in Scotland to a Frenchman , he sells it at whatever price he wants ..if this includes a British purchase tax , so be it. Any tax matters are between the Scottish factory and the HMRC. The EU will not be putting a tarrif on it. If that Scottish company wants to sell a consignment to Carrefour , they will probably make an arrangement with HMRC and not pay a sales tax, but it will be factored into the yearly profit margin of the company.
Finally if that Scottish company also deals with Prawns from Vietnam for Carrefour, then they have to declare them on the manifest as a separate tariffed item for French Customs

 

[oyster]

I've read countless arcticles, mostly from the government, stating how businesses and citizens need to be prepared for 1st Jan 2021. But I can guarantee, the customs system isn't anywhere remotely prepared for the onslaught they're going to receive from all the extra European mail

The articles appear to be exactly what you'd expect. Propaganda to ensure that blame attaches to us (individuals, business, anything non-governmental) while attempting to exonerate everything governmental.

They will claim: "We told you to get ready. It's your fault you didn't."

Right down to it being your fault that you didn't receive the item you ordered for months due to customs delays. You should have bought it months ago. Not theirs for failing to have sufficient customs capacity.

 

[Woosh]

The UK has concluded a FTA ,so there is no added tariff.

it's not clear if the UK and EU will insist on rules of origin (RoO) for re-imported or re-exported goods.
The FTA concerns only with goods containing at least 60% in value of EU or UK or both parts.
Take e-bikes for example.
The UK will have to lift anti-dumping on Chinese e-bike soon because we trade with China on WTO rules from 1/1/2021.
Therefore, I will be able to import Chinese e-bikes soon without paying 37.5% anti-dumping levy.
If I try to sell that bike to an EU customer, although I have paid tariff on parts that I imported from China, the bike I sell to EU customer would not have anti-dumping and may be 37.5% cheaper.
The re-exported bike may subjected to EU duty and EU anti-dumping levy.

 

[oyster]

As I see it, any EU exporter will charge their countries domestic VAT on their sales..anywhere ,to any customer who is not commercially registered.

I don't see that at all.

The EU is now like any other country of the world. We should not charge VAT on goods we export to the EU. Nor should EU suppliers charge VAT on goods they export to the UK.

Of course, I imagine some small EU companies will just charge the VAT-inclusive price regardless (and vice versa). But that is wrong.

 

[Danidl]

I don't see that at all.

The EU is now like any other country of the world. We should not charge VAT on goods we export to the EU. Nor should EU suppliers charge VAT on goods they export to the UK.

Of course, I imagine some small EU companies will just charge the VAT-inclusive price regardless (and vice versa). But that is wrong.

Welcome to the real world... The smaller operation in Germany is not going to bother with the additional paperwork of dealing with a retail customer buying from London. It is different with a fully registered company , which even today gets their goods VAT exempt, but pay locally.