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Brace for Brexit 13: Selling goods to consumers

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Jason Croke looks at how GB businesses selling to EU consumers (B2C) will change from 2021 and how the customer experience may well drive the VAT approach.

2nd Dec 2020
VAT Director Rayner Essex
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Pre-Brexit Recap

Take the example of a consumer in Spain (B2C) who buys a handbag from a UK seller. Currently, the supplier charges UK VAT (20%) to the Spanish customer and the goods are shipped to Spain and received by the customer duty free and with VAT paid in UK and therefore not subject to Spanish VAT. 

If the UK sells more than €35,000 of goods to Spanish consumers, then the distance selling rules require the UK seller to register for VAT in Spain. Then all future sales to Spanish customers would fall under the Spanish VAT registration, subject to Spanish VAT and no longer be subject to UK VAT.

In terms of experience, the customer pays VAT – either UK or Spanish – and this is as it should be.

Example

  • Handbag sells for £100 + £20 UK VAT (declared to HMRC).
  • If distance selling in play: handbag sells for £100 + £21 VAT (Spanish standard rate is 21%), paid to Spanish tax office.

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Replies (1)

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By PatrickMorrello
16th Dec 2020 10:02

If you post a package to a customer in the EU and the value is under 150 Euros, am I right in thinking that there is no import duty (because under 150 Euros) but there will be import VAT, payable by the customer to their local post office?

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