Online shopping

Jan 13, 2021

Brexit was always going to bring new trading rules; and the costly impact of the UK’s departure from the EU has been felt by online shoppers since the start of the year. VAT and customs charges which until now might have earned a brief glance by online shoppers on payment screens, are now causing costs, confusion and even shipping delays at every turn.  Let’s look at why.

Buying online from GB by an Irish customer

Buying goods online for personal use from GB is now treated as importing a good into the EU (Northern Ireland continues to follow EU rules), similar to goods we buy from the US, China or Australia, for example.

VAT

If an Irish customer buys something online from the UK and it costs more than €22 (the customs value plus transport, insurance and handling charges), Irish VAT will apply. This VAT is payable by the buyer. UK VAT should not generally be charged by the UK seller for these transactions.

Revenue has advised that the carrier or postal service delivering the goods will complete the customs documentation and will calculate the VAT and customs based on the information it has to hand. The consumer must pay the charges to An Post of the courier before they can receive the package.  

Some companies in the UK, such as Amazon, have said that they will pay the Irish import VAT for the customer so you shouldn’t expect a bill from An Post or a courier when ordered from them.  

The VAT threshold of €22 per package will be abolished from 1 July 2021 meaning that import VAT will be paid on all goods purchased from outside the EU and will always be collected regardless of the amount due. 

See Revenue.ie for more information.

Customs duties

In terms of customs duties, where the goods are made and how much they are worth are important considerations. The general rule in Ireland is that orders with a value below €150 (including transport, insurance and handling charges) will not be liable to Irish customs charges regardless of where the goods are made.  

The free trade agreement reached states that there will be no customs duties on goods coming to Ireland from Great Britain where those goods are made in the UK. 

If you purchase something online that costs more than €150 and it is not made in the UK, customs duties will apply and the rate of the charge will depend on the type of product ordered. You can find all the rates in the TARIC database.

See Revenue.ie for more information.

For information on how import charges are paid, click here.

Buying goods online from Ireland/EU by a customer in Great Britain

Where a customer buys goods with a value of STG£135 or less:

  • If the goods are outside the UK and sold through an online marketplace to customers in Great Britain, the goods will have UK supply VAT charged at the point of sale.
  • If the goods are outside the UK and EU and sold through an online marketplace to customers in Northern Ireland, the goods will have import VAT charged.

The £135 limit applies to the value of a total consignment that is imported, not the separate value of individual items that are in a consignment. The intrinsic value must be established when applying the £135 limit; that is the price the goods were sold for not including transport or insurance costs (unless they are included in the price and not shown separately on the invoice) and any other taxes and charges that are identifiable.

Where goods are sold through an online marketplace, the online marketplace will be liable for the VAT unless the goods are being sold from Northern Ireland to a Northern Ireland customer.  In this case, the seller remains liable for VAT.

HMRC’s definition of an online marketplace is a business using a website or mobile phone app (such as a marketplace, platform or portal) to handle the sale of goods to customers which meets all of the following conditions:

  • in any way sets the terms and conditions on how goods are supplied to the customer,
  • is involved in any way in authorising or facilitating customers’ payments,
  • is involved in the ordering or delivery of the goods.

Consignments valued at more than £135

Normal VAT and customs rules will apply on importation of the goods into Great Britain from outside the UK or into Northern Ireland from outside the UK and EU. This means that the customer will have to pay VAT to Royal Mail for example before the goods can be delivered.

Customs

The free trade agreement eliminates customs duties on goods coming to GB from Ireland where those goods are made in the EU. If this isn’t the case, UK tariffs could apply and the rate will depend on the goods purchased.  

For more information see gov.uk.