Changes with regards to EU Value Added Tax (VAT) are coming to businesses selling goods to customers located in the EU. The changes will take effect on the 1st of July 2021. Royal Mail have three options available to help you manage these changes – depending on the size and nature of your business.
If you do nothing, then your item will be delivered Delivery Duties Unpaid (DDU). The customer may have to pay import VAT (and customs duties, if payable) and a handling fee in the receiving country. These charges will depend on the country you are sending to, the value of the item and whether it is a gift or commercial goods.
NB Amazon insist that items sold on their platform are delivered tax and duty paid!
Royal Mail EU Value Added Tax advice
1. Selling through a marketplace
If you sell through a marketplace, they are likely to have registered for IOSS. If so, you just need to assign their IOSS number in the pre-advice to us for the items sold through that marketplace.
This means that if you sell on marketplaces you will need to know their IOSS number AND figure out how any automation solutions you have can pass that number to Royal Mail to indicate that EU Value Added Tax has already been paid.
2. The Import One Stop Shop (IOSS)
You can register yourself, via an intermediary, and file your own EU VAT returns. Or, if you prefer to concentrate on selling, you may want to consider Royal Mail’s ‘assisted’ IOSS solutions with their partners Deloitte and Taxamo.
Whichever approach you choose it allows you to calculate and collect VAT from your customer at the checkout and pay it directly to the EU. You just need to assign the right IOSS registration number to each item in the pre-advice you give to us.
3. Postal Delivery Duties Paid (PDDP)
Royal Mail PDDP is currently undergoing trial, due to be operational by July. If IOSS isn’t for you, or you are sending items above €150, Postal DDP may be the answer. It allows you to calculate and collect VAT and customs duties from your customer at the checkout and pay it to the EU tax authorities via Royal Mail.
For more information on handling EU Value Added Tax when shipping with Royal Mail, see the help page on their website.