More and more people are exchanging local seasonal shopping, in festively lit shopping streets, for the comfort of online shopping from their own sofa. As webshops continue their race against the clock so as to be prepared for the holiday season, there is an additional point which they should take into account this year. We are of course referring to Brexit. This is all the more pressing during periods when the delivery time may increase. You may think that Brexit is something to be dealt with after New Year’s Eve, but you would be wrong. If your products cannot be delivered by 31 December 2020, Brexit may give rise to problems now.
Current situation
Let’s start at the beginning. If you currently sell goods, through your webshop, to a consumer in another EU country, this sale is VAT taxable either in the country of departure or in the country of arrival of the goods. This depends on the total annual volume of your sales to a particular EU country. The same applies to sales to consumers in the United Kingdom (UK). You calculate either Dutch or UK VAT, depending on the size of your turnover.
Brexit: 1 January 2021
As of 1 January 2021, the UK will be treated as a non-EU country for VAT purposes. This will make the situation slightly more complicated. In addition to VAT aspects, customs issues will arise. Goods that are shipped from the Netherlands to the UK will become subject to export formalities in the Netherlands and import formalities in the UK. The list of matters, that you need to keep in mind, just got a little longer.
New Year’s resolutions for 2021
As the consumer’s Christmas wish list grows, so does the waiting list for logistical service providers and customs agents. Although Father Christmas can deliver all his gifts in one single night, our experience is that regular (overnight) shipping can in practise be prone to seasonal delays.
Bear in mind that your customers may order more presents, at a later moment, which may increase delivery times further. Last-minute shopping is romanticised in seasonal movies. However, in reality, gifts often either arrive at the last minute, or are slightly late.
So, what would be the New Year’s resolutions from the perspective of customs and VAT (obligations) for 2020 and 2021? First and foremost: start preparing now. Make sure you send out your deliveries on time, so that your UK customers can place them under the Christmas tree on time. This way, you can avoid (Brexit-related) additional customs obligations for your webshop. However, beware: all the e-commerce bustle could lead to delays for delivery firms. And a delay of even a single day may have far-reaching consequences, both for your customers and (if the delay leads to delivery in the new year) for your VAT and customs position.
Be prepared
As of next year, even Father Christmas will be subject to customs and VAT formalities if he delivers goods to the UK, from his warehouses in the Netherlands. But Santa doesn’t have to do business again until the end of 2021, which leaves him plenty of time to deal with Brexit. Your webshop, on the other hand, only has a matter of weeks to complete its preparations. After all, you will surely want to play your part in that perfect picture, where everything is delivered just in time for the holiday season and Brexit.
Would you like to learn more about how to make sure your webshop is Brexit proof? We would be happy to bring you up to speed over a digital cup of coffee and a mince pie. Feel free to contact us.
This content was published more than six months ago. Because legislation and regulation is constantly evolving, we recommend that you contact your Baker Tilly consultant to find out whether this information is still current and has consequences (or offers opportunities) for your situation. Your consultant will be happy to discuss the latest state of affairs with you.
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