The A to Z of Brexit: Important (tax) terms for online sellers
March 3, 2021
After the transition period in 2020, Brexit has led to several uncertainties since the beginning of the year, especially for online sellers. Some regulations had to be readjusted and some revisions are currently in the making.
For an overview of the new regulations and the associated terminology, we worked with hellotax to create an A to Z list of the most important (tax) terms and regulations online sellers should know.
Amazon FBA no longer handles shipping of parcels between the UK and the EU as customs duties have to be considered since the beginning of the year. EU sellers must import their goods into the UK first and UK sellers into the EU.
Brexit: Since 1 January 2021, the transitional period of Brexit, the UK’s exit from the EU, is over. The UK is no longer part of the European Union, the single market, the customs union and the VAT regime. Here in the Brexit-VAT Guide from hellotax you find more about the different scenarios and the resulting regulations.
Customs Union: The (European) Customs Union is the union of the member states into a common customs territory where goods can be sold without the imposition of customs charges. Due to Brexit, the United Kingdom is no longer part of this union and customs duties arise.
Delivery Duty Paid (DDP) means that a seller has fulfilled his responsibility when the goods are placed at a named place and cleared for import.
EORI number: used to identify economic operators in the EU and for customs duties. When selling from the UK into the EU or the other way round, you will need to get an EORI number for handling your customs formalities.
Fiscal representative: an economic operator appointed by a foreign company to take care of VAT and tax obligations in the respective country. Many EU member states have repealed a former regulation, making fiscal representation for UK sellers no longer necessary.
GBP 135: Sales via the own online shop and orders from online marketplaces are all treated differently in terms of VAT and liability. Decisive is besides the sales channel whether the threshold of GBP 135 is reached.
H-S Codes: The Harmonised Commodity Description and Coding System, short HS, is an internationally standardised system to classify traded products. Since 1 January 2021, the UK is using the global (6 digit) and not the European format anymore.
Import VAT: Imports from the EU into the UK generally remain duty free, however, importers into the UK must register for VAT (importer of record) and pay import VAT.
Importer of Record: The Importer of Record (IOR) is officially the owner/purchaser of the products and responsible for the payment of duties, tariffs and fees.
July 2021: The e-commerce VAT reform comes into force on 1 July 2021 changing the VAT and reporting system within the EU. Hellotax can help you with all new regulations regarding VAT.
Low Value Consignment Relief: The UK withdrew its EU GBP 15 low-value consignment stock relief threshold on 1 January 2021 and replaced it with a new GBP 135 regime.
Mini One Stop Shop (MOSS): As the transition period has ended on 31 December 2020, the MOSS can no longer be used for VAT declaration and payment for B2C supplies of telecommunications, broadcasting and electronic (TBE) services.
Northern Ireland: Due to the so-called Northern Ireland protocol, special regulations between Northern Ireland and the UK/EU are in place. Northern Ireland is still part of the EU single market and in the same customs territory.
Online Marketplaces: Since the beginning of the year, online marketplaces must charge and report VAT on sales made on the online marketplace from the EU into the UK if the value is not exceeding £135.
Place of supply of digital services: The place of supply of cross-border digital services is the location of the consumer. This is also the place where VAT is due.
Rules of origin: The Rules of Origin (RoO) determine the “economic nationality” of traded goods. Only products with a certificate of origin from the EU are duty-free for trade between the EU and the UK. That means the goods originated in or were sufficiently processed or changed within the EU.
Single market: The European Single Market is the common internal market of the Member States of the European Union, in which many barriers to trade, such as customs duties or import fees, have been abolished. The UK is no longer part of it since the beginning of the year.
Thresholds for VAT: When selling from the EU into the UK, there is no VAT threshold that has to be considered anymore. You will need to register for VAT in the UK for the reasons mentioned in section G. Further, EU thresholds are not relevant for UK sellers anymore so when selling from the UK into the EU, the goods are subject to import VAT and in most cases UK sellers need to get a VAT number in the (EU) country of import.
UKCA: On 1 January, the UKCA marking replaced the CE marking in the UK. UK sellers should use the UKCA marking as soon as possible, however, companies may use the former CE marking until 31 December 2021.
WTO Terms: WTO Terms are basic rules for trade by the World Trade Organization. With the UK not being part of the EU, according to these terms a tax (tariffs) is introduced for trade in goods between the UK and the member states of the EU.
X, Y, Z
Well, we said A to Z but to be fair, there isn’t much at the tail end of the alphabet. If you think of any we’ve missed, we’d love to hear them!
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