Why Should You Be Concerned About Selling Overseas?
Selling online opens up a global market place to you. It provides access to lots more customers, however, it also exposes you to extra complications too. These include shipping and additional overseas VAT, sales and customs taxes as well as handling charges. Selling art overseas after Brexit presents many challenges.
Unless you are clear about what the requirements are to ship overseas you risk delays to customers. Customs will often delay your products if paperwork is incorrect. They may even return it to you (usually at an additional cost to you). You risk customers incurring extra costs they were not expecting. As a result of all of this you risk poor reviews from customers which is no good for any business. There is also a possibility of incurring fines if authorities feel you are trying to avoid charges.
How Can I Help?
I hope to try to make sense of some of the latest information for selling art overseas after Brexit by
- explaining what has changed in the UK recently
- explaining what you need to be telling your customers and how
- why you need to register for an EORI number
- what paperwork you need to complete for overseas orders
- how to tell customs exactly what your package contains to ensure it is processed correctly
- how to avoid angry customers faced by delays and unexpected costs
The relevant authorities have to date done a poor job to help small businesses like you understand things. Advice is often conflicting and often stated in corporate speak that means little to a small business. I want to help you to understand what is required. I want to help you to understand what you need to explain to your customers. If you are going to ship to customers overseas they need to know what to expect before you ship their order so that there are no surprises at either end.
I am not a legal or tax expert. This information should not be considered as legal or tax advice. You should consult your own legal or tax expert who is qualified to give you that. What I offer here is simply my understanding of the current situation. It is based on information publicly available from the relevant authorities. By explaining how I currently understand the situation hopefully it will help your understanding too.
I also offer this information from a UK perspective. Some of the principles will be common wherever you are based in the world but I will focus on UK businesses dealing with customers in the EU as well as other parts of the world. If you are based elsewhere you may need to look for further advice to complete the picture for you.
What Is Brexit
In the lead up to 31st December 2020 it will have been hard to avoid Brexit in the news if you live in the UK or even in Europe and have dealings with the UK. Brexit dominated the news for a long time. Even now, however, many people still don’t fully understand Brexit. They are still coming to terms with how it has affected their small businesses.
On 31st December 2020 the UK left the European Union. Whilst part of the union the UK traded freely with other countries in the union. That meant that if you as a seller sold your goods to another country in the EU then you charged people the same fee for your product as anyone in your home market. The customer would not need to pay extra fees (with the exception of a shipping charge collected at point of sale of course which may vary depending on distance). Goods could move freely within the EU without incurring further charges.
What Has Changed?
A lot has changed for selling art overseas after Brexit. This will impact on you as a small business based in the UK if you ship to countries still in the EU. Since Brexit sellers in the UK are no longer able to take advantage of free goods movement within the EU. Additional fees are now likely when shipping to the EU. Customers may need to pay these directly in order to receive their goods.
Before Brexit the UK had an import VAT tax. If you purchased something from another country outside the EU, you would likely need to pay VAT on the product when it was imported. Additionally some products would also attract a customs tax too. Complex regulations determine what products attract this and at what rates and values.
The standard VAT rate in the UK is 20% (although some products would attract a lower rate of VAT). What would usually happen is that when product is imported it would be held by customs or the local carrier sorting office. You would receive a card through the post informing you of this and instructions of how to pay any tax due. A handling fee would often also be charged. All fees could usually be paid online. Once you had done this the item would be delivered to you within a couple of days.
Before Brexit any country within the EU could send to another country within the EU. Customers would not be charged import VAT and many products were able to avoid customs tax. Import VAT and customs tax would mainly be charged on products coming from outside of the EU.
As a result of Brexit the UK left the EU. Now if a UK business sends product to an EU country then VAT import tax will be due in that country. This has to be paid directly by the customer. Similarly if a UK customer buys from an EU seller they must also pay UK import VAT in order to receive their product.
Since 1st of July 2021, all commercial goods sent to any country in the EU will be subject to VAT. This is charged at the VAT rate in place in that country. Within the EU currently the average VAT rate is around 20%. Rates, however, do vary from country to country from 17% to 27%. If an EU seller sends product to the UK, the UK customer will be charged VAT at the UK rate.