NEW EU VAT AND SHIPPING INSANITY

You might be aware that as of the 1st July 2021 the EU has introduced ludicrous new customs and VAT rules that can potentially make buying from outside the EU uneconomically expensive for EU based customers. The main reason for this is the abolition of the 'everything valued at under 22 euros (£15) on the customs form is VAT free' thing. This means that literally everything that EU residents buy from outside the EU will now have import VAT charged at their countries local rate, plus the ever nebulous customs 'handling fees' applied by the local postal system. As of the 1st Jan, the UK is no longer part of the EU.

Its the handling fees that are the killer. We're pretty sure most people wouldn't mind that much about paying 20% VAT on a small value order. Its annoying, but its still workable. Its the handling or admin fees that postal systems and couriers add for processing items through customs that make things uneconomical. Thes can cost from 5 euros in some countries, up to an absolutely insane 25 euros in Belgium! Nobody is going to buy a £10 PCB from us if they have to pay £2 VAT, plus an extra 25 euros for the privilege of paying that VAT.

In order to combat this situation the EU have introduced something called the IOSS, which supposedly means that online shops outside the EU are meant to charge EU customers VAT at the shop checkout. Then they electronically add the shops IOSS registration number to the package shipping details so that EU customs know not to charge VAT again, and there won't be any extra import handling fees (although someone should probably inform German customs that this is how its meant to work). The shop then hands the collected VAT over to EU authorities.

Please bear with us while we try to stop laughing..........


This is all very well in theory, but unsurprisingly in practice its extremely baffling to navigate. In order to get an IOSS number a shop has to register for EU VAT in an EU country, and then have a VAT intermediatory in that EU country to submit payments and paperwork on their behalf. Obviously this costs money that many small businesses just don't have and its something of a gamble to take when not even VAT experts or many countries customs departments seem to fully understand how the new systems actually work yet, and many sources of advice are either incomplete or completely contradictory.

The situation isn't helped by the fact that various systems that were meant to be in place just aren't ready in time, or don't seem to properly integrate with other systems yet. This is despite every authority involved knowing literally years in advance that the deadline was 1st July. The UK tax authorities have promised for months that a UK based method of registering for IOSS would be ready in time for July. We aren't at all shocked to learn that it could be another 6 months.

One positive thing is that large online marketplaces such as Ebay, Etsy and Amazon have to deal with all this VAT horseshit on behalf of sellers, so they collect EU VAT from buyers and send it to EU authorities themselves. Sellers then use the IOSS number belonging to the marketplace and packages should arrive with no further VAT or charges.

The end result of all this is that we have had to temporarily close our website shop for EU customers as we don't currently have an IOSS number or the facilities to use it, which means that EU customers buying from our site shop might face an unpleasant surprise of both customs VAT and handling charges on receipt of their orders. We are working on finding some kind of solution to this and hopefully some of the promised systems will actually be put in place sometime soon, but in the meantime we have moved some items over to our ETSY and EBAY shops, and in theory EU customers can buy from there without facing any further unexpected charges. If theres anything specific that you want to buy, but its currently only on the site shop, then get in CONTACT and we'll see what we can do.

 

Sorry about all this. We didn't vote for Brexit.