Brexit – Increased Costs and Complexity for VAT and Customs

LinkedIn Twitter Facebook

 

Author: Richard Asquith, VP of Global Indirect Tax, Avalara

 

The UK’s vote on 23rd June to leave the European Union (EU) has caught governments and businesses by surprise.

Not only was there no planning for post-Brexit trading models, but it is now clear that nothing is likely to emerge for many months or even years.

 

What is almost certain is that eCommerce to and from the UK faces an increased VAT and customs compliance burden, plus an increase in costs.

 

Exiting the EU single market means new tariff costs
The Brexit vote was largely driven by worries around EU immigration into the EU. To take back control of immigration, the UK will almost certainly have to leave the EU’s single market. This means an end to the right of eCommerce merchants to sell goods across EU borders without tariff charges or customs checks; most goods would face customs levies of around 3%. In addition, there would be a deluge of new import documentation requirements, which would hamstring small businesses in particular.

 

Brexit Single Market Tariff Costs

 

Increased tax bill on leaving EU VAT regime
Brexit entails the UK leaving the EU VAT regime. Ecommerce merchants would forfeit a range of VAT reporting and payment reliefs as a result. Sellers of goods would lose the distance-selling thresholds, meaning they would have to VAT-register immediately in any EU country as soon as they make their first sale.

 

This could add €5,000 per annum per EU country in costs (EU estimates). Providers of digital services (e-books, streaming video or games, software, etc) to consumers would lose access to HMRC’s simplified Mini One Stop Shop (MOSS) reporting system. This would entail them VAT-registering in the EU to make the filings and returns, as they do today through the UK.

 

Remain calm and carry on trading
The details of the above risks will not be fully determined until the UK can define and negotiate its Brexit plan with the remaining 27 member states. This is unlikely to be concluded until 2020 or later. Until then, nothing will change, so eCommerce sellers should not panic and stay focused on growing their businesses.

 

LinkedIn Twitter Facebook

The legal landscape for online retail in Canada

The legal landscape for online retail in Canada

The legal situation around online retail in Canada is complicated by its general devolution from federal to province / territory level. In theory this means 13 different sets of terms and conditions needed. In practice, there is a very high degree of uniformity. This article looks into Canadas legal system from an online retailers position.
Online retail competition in Canada

Online retail competition in Canada

Canadians are amongst the most prolific cross-border eCommerce purchasers in the world - however, something to think about is that more and more local retailers, who previously were poor at eCommerce, are increasingly now getting better at it. This article looks at some of the top retailers in the Canadian eCommerce market to help you understand the competitive landscape there.
The Size of the Canada Retail Market

The Size of the Canada Retail Market

With the presence of US retailers in Canada unsurprising, some may find it hard to believe that not all northward ventures have ended in success. Therefore, you shouldn’t assume that the presence of a US giant means that other cross-border retail efforts would be hopeless. This article looks at the value of the total retail market in Canada and outlines the current competitive landscape there.
Online retail marketing in Canada

Online retail marketing in Canada

With internet and device penetration significant and online browsing behaviour fairly typical of a developed market, the landscape of online marketing looks very familiar to highly connected countries. However, retailers should be aware of the subtle but significant differences between the Canadian and the UK markets. This article looks at use of marketing methods for online retailers in Canada.
Connectivity and online behaviour in Canada

Connectivity and online behaviour in Canada

With typical online behaviour similar to other western counties, the Canadian eCommerce market can be seen as very appealing to cross-border retail. Exploring its sophisticated infrastructure, this article looks at the details of Canadian shoppers’ behaviour online, and examines some of the demographic nuances in internet access, online activity, and device preferences.
Online retail payment methods in Canada

Online retail payment methods in Canada

In different markets, shoppers can have varying preferences when it comes to making payments for orders on eCommerce sites. Canada is no exception but happily, there is more of an opportunity than a challenge when it comes to online retail payment in Canada. This article looks at the online retail payment methods within the Canadian eCommerce market.
Online shopping behaviour in Canada

Online shopping behaviour in Canada

When Canadian Shoppers buy online, how do they go about it, and what do they buy? With the use of mobile growing and the use of various devices for online shopping looking similar to trends in the UK, Canadian eCommerce has been a sleeping giant, but it’s waking up. And quickly. This article looks at the online shopping behaviour of the Canadian eCommerce market.
Online Retail Logistics in Canada

Online Retail Logistics in Canada

How should you go about planning your logistics strategy for servicing the Canadian eCommerce market and what are the options available? Canada is a spectacular 9,306 km from extreme east to extreme west so for any non-Canadian retailer looking for delivery partners to ship into the country, only large players with the scale to cover such a geography are particularly relevant. This article looks at the online retail logistics within Canada and how this impacts its eCommerce market.
5 tips for breaking into online retail in France

5 tips for breaking into online retail in France

France boasts being the 5th largest eCommerce market in the world and with an expectation to exceed €80 billion turnover in 2017, for those looking to enter this thriving online market here are five tips that could help you to break into the French online retail space.
Five things we learned at the eCommerce Worldwide Cross-Border Summit 2017

Five things we learned at the eCommerce Worldwide Cross-Border Summit 2017

On the 24th May 2017, we hosted our third annual Cross-Border Summit at the ExCeL London. Delegates from retailers and solution providers across the globe came to hear and share the latest insight on cross-border trading. But what were the key takeaways from the day?

Contact Us

eCommerce Worldwide
2 Ching Court
49-53 Monmouth St
London
WC2H 9EY

Tel: 0203 696 0980
2017© eCommerce Worldwide

Keep In Touch

powered by Affino

About eCommerce Worldwide

eCommerce Worldwide provides online retailers with all the information, and resources, they need to develop cross-border strategies for entering new markets around the world
Read More