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.