sellmyretro.com

On 1st January 2021, the UK leaves the EU and changes are coming to the rules over payment of VAT on goods purchased from outside of the UK.

From 1st January, if the value of the goods sold is less than £135, SellMyRetro becomes liable as a marketplace to charge the UK VAT on ALL goods sold through the platform from overseas to UK buyers.

To make it worse, from 1st July, similar rules apply to sales to any of the EU member countries (where the valus is less than €150) - even if the goods are sold by a seller in another EU country.

So, what are SellMyRetro's proposals to cope with this?

1) Sales within the same country are NOT affected so the process will not change
2) Sales to buyers outside of the EU and UK are NOT affected (there are some countries with similar rules, but they have a high threshold on turnover before these rules apply).
3) For all affected sales, payment will NOT be paid direct to the seller. Instead, we will automatically increase the amount you see on the site according to your location. Payments will then have to be made to SellMyRetro instead of the original seller. We will deduct the VAT and a handling charge from your payment so that the seller receives the full value of the item (less their own paypal charges).

Unfortunately, this will result in hefty "perceived" price rises for some customers, as we need to apply the destination based VAT plus an extra 11% to cover the additional paypal fees and a small handling charge for sellmyretro's admin.

Take an item sold by a seller in Germany for £100 normally. They are not VAT registered.

A buyer in the UK would end up seeing a price of £131
From this, is deducted:
VAT @ 20% included in the £131 = £21.83
PayPal fees @ 3.5% = £4.59
Balance received by Sellmyretro = £104.58

We pay the seller the original £100 - and our handling fee is £4.58

Compare this to a buyer in Hungary, where the VAT rate is 27%. They see a price of £138
From this, is deducted:
VAT @ 27% included in the £138 = £29.34
Paypal fees @3.5% = £4.83
Balance received by sellmyretro = £103.83

We still have to pay the seller the original £100, and our handling fee is £3.83

The figures are improved if the seller is VAT registered, as we would have to pay them the net price before they added VAT rather than £100, and would add the UK / EU VAT onto that net price as appropriate.

If the total order exceeds the £135 / €150 limit, we are not sure how to handle this, as SellMyRetro is not allowed to collect the VAT. Items over these limits may be subject to customs duties.

The VAT and duties has to be either paid by the seller (and the items sent by courier who can handle "duty paid" items) or paid by the buyer at point of entry, plus a handling fee.

Unfortunately, there does not appear to be any other method. We are open to ideas on how to get around this.

Thanks for the information/clarification Rich...

Interesting times ahead...

The UK and EU notes say that this is aimed at business sellers only and the destination VAT will not apply to sales which are Consumer to Consumer.

My problem is how would you identify this on the packet so that VAT is not charged at the port of entry?

I cannot get a response from Royal Mail or HMRC what needs to be put on packets at all !!

I honestly not know why sellers have to be VAT registered?. Surely this is a "used/pre-owned" market place where items are not new, or sellers who are hobbyists, producing kits and products from parts which are new and have been taxed or levied originally.

All this bureaucracy is killing the site and stopping from retro enthusiasts from suporting the community who have products which are specialised to sell for old equipment. I want to purchase things fro the Sinclair QL and most of the new products are from overseas.

EBay allows sellers to sell without registering for VAT for even overseas sellers and buyers.

Is this just making things complicated for sake of it? The site is a community environment for amateurs and enthusiasts.

True - but I think you misunderstand. You seem to think that SellMyRetro is imposing these rules. It is not SellMyRetro - but the various tax authorities around the world.

If someone is self-employed, ALL of their self-employed income (whether it is from retro products, or (as in my case) programming) is used to determine whether they meet the VAT registration threshold in their own country.

The new rules are doing away with any registration threshold for sellers sending items to the UK (and other EU countries from July 2021); so in line with (Italy I think), as soon as you start selling items to that country, you have to register for VAT!

Oddly HMRC in the UK introduced the concept of "hobby business" when the beauracracy became too much for them on e-services sales, but the rest of the EU did not recognise that concept! Perhaps that is why they have ignored it on the sale of goods.

I agree about how bureaucracy is killing small business - believe me, as the admin of the site, I am all too aware of this - but unfortunately it is bureaucracy introduced by the UK Government, the EU, US state governments, Australia, New Zealand and more countries around the globe!

Sellers on SellMyRetro do NOT have to register for VAT if they sell through the site (unless they exceed the VAT threshold in their own country). However, the site (ebay and Amazon also) will have to start charging and collecting the VAT on items sold from overseas to consumers within the UK from 1st January 2021. The same also applies to collecting the VAT on items sold to an EU country from 1st July 2021

Ebay already do this for sales on goods to Australia and New Zealand - thankfully SellMyRetro does not need to do so at the moment, because there is a sensible threshold (ie amount of sales you need to make to the country) before you have to do it!

For clarification - the UK legislation says that from 1st January 2021 ANY seller (not "business") outside of the UK selling goods to a consumer in the UK has to register for UK VAT - no matter how many sales they make.

If they sell through a platform (sellmyretro, ebay or amazon for example), then the platform is responsible for sales made through it, so an overseas seller would not have to register for UK VAT if they only sell through platforms.

The EU is bringing in the same rules from July 2021.

The US and Australia already have the same rules, but only if the value of sales to that country / state within a given 12 month period exceed a high threshold ($100,000 or more)

It can be compared to buying an old item in a non-EU country, e.g. the United States. The EU does not care if the previous owner originally did pay sales tax, you pay VAT on import (but there is the €22 exception). So in the future, if we buy in the UK, we have to pay VAT on import: UK VAT will be seen as a foreign sales tax.

The only thing that changes is that you don't pay the VAT to the postal service, but to the platform, SellMyRetro in this case. So yes, we do have to pay VAT for consumer to consumer sales, even if the original owner did already pay VAT, the EU doesn't care about already foreign sale taxes, you pay VAT on import.

For consumer to consumer sales within the EU (e.g. Netherlands to Germany), nothing will change.

I am not so convinced - both the EU and UK guidance notes on this VAT on import specifically says it only applies to business sales! How you identify a package as not being sold by a business seller is another question

I should read that in more detail, but the general idea is not to change the BTW system, but to change the party who collects the VAT. The EU wants to close the AliExpress loophole: There are too many packages coming in from China to check all of them, so nobody pays VAT for stuff bought on AliExpress. In order to pay VAT data needs to be entered in computers, lots of work for the postal services, but a platform like AliExpress already has all the information to do automated VAT payments, and so the new rules will require AliExpress to collect VAT.

In a way the new situation is an improvement, PostNL for example currently charges €13 for doing a VAT declaration. If you buy e.g. something in the US for e.g.. €25, you currently pay another €13 + 21% *€25 = €18.25 to PostNL to get the item imported, and because US sellers are incredible honest about correct customs values, this makes the US quite a costly country to buy stuff from. In the future this €13 is gone, and this can change the situation considerably.

The postal services are going to check for an "IOSS number" on the package label. If there is an IOSS number on the package and it is successfully validated, the package will be released and the postal services will not charge any VAT or import costs to the receiver of the package. Between EU member states, there exists no border check, so no IOSS number or anything else will be checked; for the postal services there are no changes to EU->EU shipments. So therefore postal services don't need to distinguish between business and consumer.

I guess that Sellmyretro will have to supply any non-EU seller that sells to an EU customer the IOSS number, so the seller can add it to his package label.

In principle the new rules "only" shift the responsibility to collect VAT from the postal services to the internet platform (but need to read all the details), they don't change the VAT rules for businesses and consumers. Therefore the new rules don't cause consumers to pay VAT.

However, in combination with Brexit, UK VAT suddenly becomes an alien tax system to the EU and EU VAT becomes an alien tax system to the UK. EU consumers already pay VAT when importing outside EU and thus will pay VAT when importing from UK and vice versa UK consumers will pay VAT when importing from the EU. That the selling consumer has already paid VAT is unimportant here. This is simply interpreting the existing rules. If we combine it with the new rules for internet platforms, this means SellMyRetro will be the one who needs to charge this VAT for consumer to consumer sales.

However... as of today there is a fresh new Brexit deal and I will be reading it with interest if it says anything about VAT. It would be great if the UK and EU would keep their VAT systems somehow connected, so this consumer-to-consumer VAT can be avoided.

I can't see any sort of deal discussing the VAT because of the EU bringing in destination VAT charges from July. From that date, the IOSS applies even to cross-border sales within the EU - although there is a threshold for businesses of €10,000 - the rules will mean that the business sells the item to the platform, and the platform then has to collect the VAT and supply it to the customer (for VAT purposes but not for legal title if they can get the courts to agree to that!).

The platform would get the €10,000 threshold if they were based in the EU (so sellmyretro based in the UK gets nil threshold)

Yes, it might be a cheaper system than the buyer paying the courier a handling fee for paying tax at the border, but then the platform will incur additional administrative and card handling charges which need to be covered (see example at start of this thread).

The other oddity is that whilst this is true for orders costing up to €150, there is then a different system for orders over that value - so how do we show this to a customer? Eg buyer in France buying from the UK - item is €100 plus French VAT. If they order 1 that gives a total price of €120 + postage (and French VAT on the postage). If they order two off the item, the price becomes €200 + postage, but they have to pay VAT on the item and postage on import!