Consumers face VAT and customs duty from 1 January if buying goods from UK
Consumers will be faced with VAT and customs duty when Britain exits the EU on 1 January if buying goods from the UK. However, the changes are likely to result in an increase in the tax take for the Government.
Revenue has outlined the costs which consumers will face after Brexit. Anything priced under €22 will not face any additional import charges. But if goods are valued at more than €22 including shipping, delivery, insurance and handling charges, then VAT will be payable.
If goods are valued at more than €150, consumers will face not only VAT but also customs duty. The charges will either be applied by the retailer selling the goods, or by authorities here on arrival.
Revenue has given some examples of how charges could hit consumers. A €65 purchase of sports goods will not face customs duty, but will be liable for VAT. This would add €13.65 to the cost of the goods, excluding delivery and so the price of the goods would increase to €78.65.
However, if sports goods costs more than €150, the charges increase substantially. Revenue gives an example of an item priced at €167, it will be subject to customs duty of €20.04 and VAT at €39.28.
That item will end up costing €226.32 – which is almost €60 more.
The customs duty of 12% will apply to different bands as the value increases. So an item valued at €167 will face customs duty as follows,12% of €97+12% of €40+ 12% of €15 which is €20.04.
Those rates could change and are dependent on what is contained in any possible Free Trade Agreement.
A flat VAT rate of 21% applies to all goods over €22. But the rate of duty applied differs depending on what is being purchased, so a complex list of rates will be applied by Revenue.
However, after 1 July next year new EU e-commerce rules will mean that all purchases from non-EU online sellers will be subject to VAT, including those under €22.
Delivery companies are putting in place measures to deal with the charges. If customs and VAT is not applied by the seller based in the UK, then the delivery companies will declare the goods and charges need to be paid before delivery.
The changes are likely to result in a big win for Revenue as it is preparing to apply VAT and Customs charges to goods being imported from the UK. Last year Revenue applied taxes and duties to 100,000 parcels, which netted the exchequer €7 million.
But Irish consumers make 70% of their online purchases from the UK, so the number of parcels to which taxes and duties will apply are expected to rise rapidly in 2021.
However, Revenue has pointed out that it has no way of knowing whether consumers will continue to buy from the UK in such numbers when additional charges begin to apply.
The Competition and Consumer Protection Commission is also warning consumers to be aware of changes to consumer rights when the UK leaves the EU.
Spokesperson Doireann Sweeney explained that consumers’ existing EU rights would no longer automatically apply when buying from a UK website post Brexit.
She said it was important to check where the trader is located. “EU consumer protection law gives Irish consumers the right to change their mind after they receive their purchases and other strong protections when buying online.
“At this point in time, these rights are also reflected in UK law. However, from January, consumers may find it difficult to enforce these rights in disputes with UK retailers.”
The CCPC said research it has carried out points to a need for consumers to check out the terms and conditions on the website they are buying from.
The research shows that while numbers buying online from the UK are falling, only one in 10 consumers plans to pay more attention to where a website is based after Brexit.