ebay UK VAT – Major Issues after BREXIT
The issue comes down to this – apparently ebay UK has no way not to charge VAT on export orders from the UK. Businesses appear to be forced to charge customers for UK VAT even though this is technically illegal because the goods are not being “consumed” in the UK ergo they are not subject to UK VAT.
How ebay UK has let the VAT situation come to this is baffling.
We contacted a major seller on ebay to ask them how they deal with orders they are exporting from the UK into the EU.
- Will they charge UK VAT when selling to the EU?
- When we pay VAT in the EU country will they refund the VAT we paid in the UK?
- Or does it work some other way?
Their reply was this (paraphrased)
The ebay system does not allow us to remove the VAT on export orders. There is no way in the ebay system for the customer in the EU not to have to pay the VAT twice.
On the subject of someone claiming back the UK VAT, there was no response.
Their reply, maybe, is at odds with what ebay say here but honestly, the “VAT/Duty Paid” option does not give much detail as to how this would work. Perhaps sellers could create products which can only be shipped to one country and account for VAT in the price that way but that would be a nightmare to do for every product. Especially when the simple solution would be for ebay to simple add the relevant VAT price to the net price entered by the seller.
I checked the HMRC website, they have some procedure for businesses. So not really relevant to this article.
I think the issue the ebay UK sellers have is that if they issue a VAT refund to the customer, for example the customer sends them proof of the import duties and charges, ebay will not issue them a refund for the commission they took on the VAT they charged.
In short, as things stands, the system of exporting with ebay seems completely broken.
July 1st 2021
Ebay have a section on their website detailing VAT arrangements for exports/imports for the UK/EU.
Unfortunately is says absolutely nothing about this double taxation issue and the article definitely sides on sellers and customers being sure they pay all the VAT they need to rather than ebay acknowledging that they appear to be facilitating the overcharging of VAT.
ebay UK appear to be focusing on July 1st as the saviour to the current problem. They say this.
From 1 July 2021, the EU will implement legislation which shifts the responsibility for collecting VAT for online purchases from sellers to marketplaces such as eBay in certain circumstances.
Sounds simple, unfortunately the next paragraph says this
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If your intra-EU distance sales are above the threshold of EUR 10,000, you will have to charge VAT based on the delivery country
Again, the talk is of “intra-EU distance sales”, not import/exports between the UK & EU so again, not relevant to this article.
What does ebay UK say about the new UK VAT rules?
From 1 January 2021, the UK introduced legislation which shifts the responsibility for collecting VAT for online purchases from sellers to marketplaces such as eBay in certain circumstances.
The UK is doing the same thing as the EU but has brought it in 7 months earlier. But again, no mention of UK exports to the rest of the world.
With regards to imports from the EU into the UK, ebay UK says this
For sellers where eBay collects EU VAT on the transaction, eBay will issue sellers with either a transaction document (imports) or a self-billing invoice (valid VAT registration number on file, with goods sold from within the EU) as appropriate
This document will show details of the transaction for which eBay has taken on VAT responsibility, and can be used for the seller’s own records as evidence that eBay has collected VAT
It says “sellers” records, hopefully it also means buyer’s records. This paper needs to be presented to customs in the EU country to avoid double paying of VAT. (In any case, this will not start until July 1st).
On the issue of differing VAT rates between countries in the EU for products exported from the UK ebay UK says this
From July 1st 2021….All sellers will have to provide a gross price and separate VAT rate on their listings, so that eBay can determine the correct amount of VAT to collect from consumers.
I read this as saying ebay UK wants to know how much of the gross price includes VAT, so they can remove the UK VAT and add the VAT rate of the destination country.
There is an interesting article on linkedin here.
Basically it details the potential upcoming nightmares of goods being imported into the EU and where the VAT will be liable to be paid and by who.
There is talk of bonded transport and storage so VAT only gets charged in the final destination country. And all this for items under 150 Euro in value…
Where does this leave UK exports to the EU as of today, 22.5.21?
ebay UK VAT is being charged at the point of sale and customers are run the risk of being charged local VAT when the goods arrive in their EU country.
As of today, buying products on ebay UK from countries within the EU is a complete no-no for most semi valuable products due to the potential of a double VAT charge.
The only way I can see purchases being done correctly and cost effectively from the UK (for all involved, buyer, seller, transport, customs) is to buy from the seller directly.
Many UK sellers are now giving EU customers the option of paying the import taxes and duties when they buy the product. (ebay does offer their GSP unfortunately in the listings I have seen and in the listings of the seller I contacted, the ebay GSP is charging import duties and taxes on top of the UK price which includes UK VAT).
Taking a chance
Perhaps if you present your ebay invoice to your customs office in the EU, they will accept it as VAT having been paid. But at the moment it seems the system to transfer paid VAT in the UK to the correct EU country is not in place yet. My inclination is to say this transfer is not happening. The VAT being paid by people in the EU is the UK VAT rate, not the VAT rate in their local country. The fact that the ebay GSP is charging what looks like the local VAT on top of the UK VAT would reinforce this opinion ie customs office in the EU are not accepting ebay receipts as proof of VAT payment
What will happen on July 1st?
The big question is how organised will customs offices in the buyers local area. Will they accept the paperwork that ebay supply? If so, the transition should be pretty seamless (assuming you are not a private seller or non-VAT registered)
Wrapping it up
In short the situation of EU customers buying from ebay sellers in the UK seems to be a mess at the moment.
July 1st might bring some clarity.
For more information EU VAT rules after July 1st
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