UK tax

Brickphaisan

Good morning everyone.
I have a question with the orders that are coming from the UK, and that is that they are charging us brickowl 20% of the total, and the truth is that I do not understand why I have to pay 20% of the total, I should not be the buyer? We sell on other platforms and this does not happen except here in BO.
Someone can help me to know what to do with this, I consider not making shipments to that country, but I do not know very well how to do it to remove it from the shipments of our store.
Thanks a lot,

Hoddie

You're not paying the VAT, your customer is. Though admittedly you pay extra PayPal fees on that 20%, but only you can decide if that minor extra cost is worth losing all orders from the UK or not.

Just to confirm, this is how it works:

Non-UK buyer pays £100
UK buyer pays £120

You pay PayPal fees on the full amount, and in the case of UK buyers, need to pay the VAT amount (the £20) to BrickOwl along with your monthly BrickOwl commission.

Other marketplaces may not be doing it this way, in which case they're not meeting UK requirements. Shipments sent to the UK that don't have VAT already paid will result in your buyer being issued a demand to pay the VAT plus a substantial admin fee.

LegoDk

This is not true. Yes for most 'pirate' brick stores this is the case. When you are a company and do everything by the book the customer does not have to pay uk tax but you as a store are responsible for paying tax in the UK. You can just make a export shipment with your EORI number and all will be fine.

I think the issue is that brickowl is resided in London and handles the sales for us, so we are like amazon just a 3rd party providing the items brickowl sold for us.
It is utterly weird though as they make basic mistakes like charge uk tax or not tax at all for shipping. You buy shipping in your own country you will have to pay tax in your own country for shipping and charge the customer the tax from the country you live in. Now Brickowl just simply removes your local tax for shipping outside EU, if you choose to pay tax on shipping.

Bricklink(which is located in the USA) does the same for some US states, so i suppose it has to do with them handling the tax for us.

Either way, just be aware when you do your taxes that sales to the UK already have payed tax so you avoid paying it twice.

Also be aware that all shipments need a c22 document now or will simply be refused on the border and sent back to the owner or discarded.

It is very complicated with customs right now, with the hard brexit a lot of questions are still unanswered. The new EU laws for import have been delayed 6 months, which will strike the UK like a hammer, because the tax free limit under 80DKK is removed and all shipments need to be charged import fees. Which means if you do not have access to the custom tools, you might be better off not shipping outside the EU (if you live in the EU).

Hoddie

>>> This is not true. Yes for most 'pirate' brick stores this is the case. When you are a company and do everything by the book the customer does not have to pay uk tax but you as a store are responsible for paying tax in the UK. You can just make a export shipment with your EORI number and all will be fine.

You're wrong. The guidance specifically states that where an OMP is involved in the sale, they themselves are responsible for collecting the VAT subject to the £135 threshold.

"Online marketplaces (OMPs), where they are involved in facilitating the sale, will be responsible for collecting and accounting for the VAT. For goods sent from overseas and sold directly to UK consumers without OMP involvement, the overseas seller will be required to register and account for the VAT to HMRC."

https://www.gov.uk/government/publications/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021

Calibrick

The UK taxes services (shipping costs are taxed per the note above) in addition to goods? To be clear, we do NOT charge or collect tax against shipping costs anywhere in the US that I am aware of, unless some specific states do so. Certainly not Federally, nor in my state (California). So I think that is a potential misunderstanding about the US in the conversation above, as a FYI. We also do not tax food, which are not considered goods - but do tax prepared foods. So if you buy a pound of ground beef at the grocery, no tax. But if you buy a burger from a chain restaurant the burger is taxed I believe as it is now a prepared product.

LegoDk

Yes, brickowl is our OMP. so they collect the tax of the sale.

It leaves a bit of a problem though which i tried to explain.

How are you going to do the book keeping of you selling something to a private person without paying tax?

I mean, it is not like brickowl is helpful in any ways with providing us with how much we sold to wich country and how much tax we payed in our own country and how much we need to book keep in section B(EU) or C(tax free outside EU) of our book keeping...

We could say we did pay the tax, but we did not and we can not prove we did in any way.

The customs law also clearly tell you to make documents of proof for exporting goods outside the EU if you want to sell tax free in your EU country and register it in the E-export app.

I assume you live in the UK and the only thing you need to think about is the £135 threshold. But we have a much larger issue as people from the EU as we need to declare and pay for every single £ we export to the UK.

It would be very nice if the website could make a list of sales every month to inside and outside EU sales, and to which country you sold to. For now we found a way, but i do not know if the UK is going to be very happy to see our EORI number exporting and not being registered to pay the tax.

It could be wrong in it all and over speculative, but it is very hard to find a way in all these laws and rules...

Hoddie

I live in Belgium.

You are sending goods outside of the EU which means domestic VAT is not payable.

UK Import VAT is charged to the buyer by BrickOwl (the OMP) and remitted in the first instance to you, and you are then required to pay the OMP as agreed.

Surely it's not onerous to document this for the purposes of your domestic tax authority, if indeed it is required at all. It is all demonstrably correct, you did indeed send the goods outside the EU, no domestic VAT was charged, UK Import VAT was charged, remitted to you, and later passed to the OMP. It is, from your point of view, a new business expense and tax relief should be forthcoming.

Regards the EORI system, can you not simply record the transaction under BO's EORI number (presumably GBGB366824270000). In all honesty I'm not sure how this works with transactions that are via an OMP.

I absolutely agree that BO could make things easier by providing monthly or annual statements on fees levied, VAT collected, UK Import VAT remitted, etc. and suspect this may happen eventually as and when the EU's new VAT scheme takes effect.

The problem here is that the UK has acted unilaterally but that's their entitlement (indeed, some would argue the whole point of Brexit is that they could do so). They are unconcerned with the problems it causes non-UK businesses, in much the same way as US states are unconcerned with the problems their tax regime causes non-US businesses. If you wish to trade to British consumers it is necessary to adapt.

Stellar

Think of the UK VAT as a fee the customer pays you and then you pay the same amount to BrickOwl.

Brickphaisan

Thank you very much to all