VAT Impacts for Customers in the EU and UK
VAT treatment of overseas goods shipped to the EU and UK have changed
From 1st January 2021, HMRC introduced a new model for the VAT treatment of goods arriving into Great Britain from overseas. This is intended to ensure that goods originating in the UK, EU and non-EU countries are treated in the same way.
From 1st July 2021, the EU introduced a very similar model, primarily designed to reduce VAT fraud and ensure all due VAT revenue is collected before delivery.
The new regulations require overseas vendors to collect VAT on all orders that do not exceed €150 (or £135), and to pay this via IOSS or to HMRC directly. Orders that have a value that exceeds €150 (or £135) will be processed in the same way as previously.
As an overseas vendor, we are now required to register for a IOSS and/or a VAT number, file VAT returns, and make payments an EU and UK bank account. As a company that is registered in the USA this essentially requires us to create a new operating companies in the EU and UK.
Our new $200 minimum order value for shipments, with delivery duty unpaid (DDU)
Unfortunately, as a small company in a niche market we simply do not have the resources to manage this new regulatory burden and the administrative overhead that it introduces. Hiring additional resource to manage this new requirement is not a viable option due to the small size of the EU and UK markets in proportion to the rest of our business.
Rather than refuse sales to residents of the EU and UK entirely, by shipping only orders with a value of more than €150 (or £135) we are able to avoid the VAT collection and filing requirement.
As long as this trade barrier remains in place, all orders that are shipping to the EU or UK via a service where duty and sales tax is paid at delivery (DDU) must have a value of at least $200 before shipping costs, so that they may be processed under the standard WTO rules (as previously).
Shipments via DHL delivery duty paid (DDP) are unaffected by these changes
If you select DHL as the shipping service, where duty and VAT is paid up front (DDP) then this will be submitted by DHL directly, and you may purchase goods valuing less than $200.
You can read more about our international shipping options, and the difference between the DDU and DDP shipping services on our international orders page.
We are aware that $200 is a little higher than €150 (or £135), but with fluctuating currency conversion rates this gives us a little wiggle room to play with rather than have to adjust the threshold on a constant basis - as our eCommerce platform is unable to to apply a block on order values for any currency other than USD.
As has always been the case, our goods are sold without including sales tax and. Please be aware that you should expect to pay VAT, duty and a customs processing fee before you may take receipt of your shipment.
We now offer a "Delivery Duty Paid" (DDP) shipping option via DHL, allowing you to pay the VAT, duty and customs brokerage fees during checkout - so no further fees will be due at the point of delivery.
We appreciate your continued support, patience, and understanding in this matter.