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

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.
Interview with Melanie Smallwood, International Buying Director at Global Fashion Group

Interview with Melanie Smallwood, International Buying Director at Global Fashion Group

eCommerce Worldwide Cross-Border Summit 2017 - Ahead of our annual event on 24th May, we interview Melanie Smallwood, International Buying Director at Global Fashion Group, to learn from her experience and knowledge in cross-border trading around the world.
Interview with Gregor McMillan, Business Development, China at The Hut Group

Interview with Gregor McMillan, Business Development, China at The Hut Group

eCommerce Worldwide Cross-Border Summit 2017 - Ahead of our annual event on 24th May, we interview Gregor McMillan, Business Development, China at The Hut Group, to learn from his experience and knowledge in cross-border trading into China.
Interview with Michael Truluck, CEO at La Redoute

Interview with Michael Truluck, CEO at La Redoute

eCommerce Worldwide Cross-Border Summit 2017 - Ahead of our annual event on 24th May, we interview Michael Truluck, CEO at La Redoute, to learn from his experience and knowledge in cross-border trading.
The latest view on eCommerce in Germany

The latest view on eCommerce in Germany

There are many benefits to entering the German eCommerce market - it’s the 3rd largest online market in Europe and has a very high internet penetration rate, but what other staistics do you need to know before entering this lucrative country?
How to use colour in cross-border online retail

How to use colour in cross-border online retail

Did you know colour can be an important driver of eCommerce sales? Research suggests 85% of buyers make their purchasing decision based on colour so getting it wrong could be a fundamental disaster for any online business. So what is the right colour to use?
Interview with Richard Longhurst, Co-Founder and Director at Lovehoney

Interview with Richard Longhurst, Co-Founder and Director at Lovehoney

eCommerce Worldwide Cross-Border Summit 2017 - Ahead of our annual event on 24th May, we interview Richard Longhurst, Co-Founder and Director at Lovehoney, to learn from his experience and knowledge in cross-border trading.
Building an eCommerce fraud prevention strategy for Germany

Building an eCommerce fraud prevention strategy for Germany

Being the world’s fifth largest eCommerce market, Germany has become an exceptionally popular destination for online merchants looking to sell their goods and services. However, retailers should still be aware of the high levels of fraud to do with their number one payment method. Therefore, what do you need to know about building an eCommerce fraud prevention strategy for Germany?
Interview with Kai Li, Vice President of International at Revolve

Interview with Kai Li, Vice President of International at Revolve

eCommerce Worldwide Cross-Border Summit 2017 - Ahead of our annual event on 24th May, we interview Kai Li, Vice President of International at Revolve Clothing, to learn from his experience and knowledge in cross-border trading.
How does device usage differ in France, Germany, and the UK?

How does device usage differ in France, Germany, and the UK?

It is well known that the use of smartphones and tablets has grown rapidly but which device dominates the traffic and at what time of day across France, Germany and UK? And how does device usage differ between these Countries?

Contact Us

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

Tel: 0203 696 0980
2016© 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