UK VAT BEING CHARGED TO COUNTRIES OUTSIDE EU?

[cjsautomation]

Hi All,

I'm a bit confused why the 20% UK VAT is being included when I'm shipping to countries it doesn't apply to. 

For example, I had sold some items to Mexico last week for £143 and the customer paid the 20% UK VAT ? 

Then today a customer from Indonesia buys an item for £29.99 Inc VAT, surely he should be paying £24.99

For the life of me I cannot understand this.  Any help is much apprecaited. 

P.S I have spoken to eBay numnerous times and they tell me to speak to a tax consultant then other times they tell me the import duties are automatically included in the price????

Thanks 

John. 

[roger_roger_over_and_nowt]

If you sold an item to an overseas buy at 24.99 in total Ebay add 20% vat on top.

I'm not sure about the other one as i know buyers (may) have to pay import duties etc (based on country) if an item is over a certain threshold but i don't know if the 20% is added as well if the item is over that threshold.

Total cost buyer pays is also dependant on whether you are sending via GSP or direct.

[cjsautomation]

The total price of this item on eBay is £29.99 which includes the UK VAT, My understanding would be that buyer would only pay the price ex VAT which is £24.99. If that customer emailed my company direct to buy said item, I would send him a pro forma invoice for £24.99 + postage because he is exempt from UK VAT as he is in Indonesia 

I don't GSP, I always send direct with courier. 

[game_raid · Accepted solution]

It all depends on the country you're shipping to, eBay is required by some countries to collect import tax at source and this would be shown in the amount received from the buyer and shown on the invoice whether you use GSP or not, if the country does not require this then the buyer will have to pay for additional import tax/duties.

It looks like eBay is not required to do this for Indonesia so you should be charging the buyer the full price of £29.99 which is what eBay has charged them and you submit your VAT as normal as you would with any sale.

You also have to make any buyer aware in the listing that they may have to pay import tax or customs duties on top either before or after delivery depending on their location.

By charging £24.99 you're at a loss because you then have to take the VAT from that, because that is what you have received from the sale. HMRC do not know the item has been sold overseas, they would only know this if you have added the buyers EORI number to the invoice as part of the declaration of goods and value statement, this is only applicable in the EU outside the VAT is charged as normal, then the courier charges the buyer 20% Import VAT that can be claimed back.

When eBay collects the VAT from a sale on your VAT return the transaction would be logged as zero rated so you're not paying the VAT again because it's already been remitted by eBay and logged against your VAT number.

A quick Google search shows the import tax is 7.5% for Indonesia so the buyer would be paying £29.99 + plus shipping and then 7.5% import tax

We import and export a lot, by no means experts but have an understanding of the process and it is always better to get professional advice on anything tax related.

[4_bathrooms]

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@game_raid wrote:

It looks like eBay is not required to do this for Indonesia so you should be charging the buyer the full price of £29.99 which is what eBay has charged them and you submit your VAT as normal as you would with any sale.

---

Sorry, that isn't correct.

The way eBay historically treated overseas sales for VAT registered sellers was to charge the buyer the full VAT inclusive price but without showing a VAT breakdown on the buyer's invoice; i.e. the seller's domestic VAT inclusive price became the net selling price for the export. In other words eBay inflated the seller's actual selling price and the seller zero-rated the export at the (inflated) price charged to the buyer. This is still the case for most exports except where the EU is concerned:

Around 2015 the EU announced plans to charge VAT at the point of sale for goods that were located overseas at the point of sale that were up to €150 (at the time equivalent to £135) in value. This legislation was expected to be in force starting January 1st 2021. However, in 2016 the UK voted to leave the EU and as a result Brexit happened on January 1st 2020. Both the UK and the EU were still committed to enact their now disparate (but still largely identical) legislation - the UK enacted theirs on January 1st 2021 as originally planned whilst the EU enacted theirs on July 1st 2021 after adding a 6 month extension due to the COVID pandemic.

I pointed out on these boards that if eBay continued to treat UK VAT registered seller's exports to the EU the same way they did for the rest of the world that EU buyers would effectively be charged double-VAT. This is because eBay would be inflating the UK seller's net selling price to their domestic VAT inclusive price with the EU buyer then paying their domestic VAT on top of that figure. Vice-versa would also be true; i.e. when a (VAT registered) EU seller sold to a UK buyer.

Perhaps it was coincidence, perhaps not but eBay subsequently announced that when a VAT registered UK seller sold an item to an EU buyer the seller's domestic VAT would be removed from the price shown to the EU buyer with the EU buyer's domestic VAT then added on top of the actual domestic net selling price. In other words VAT registered seller's exports to the EU would be handled correctly.

[mango-manila]

Good day,

All the above seems understandable.

Why are Ebay UK charging varoius VAT amounts to International buyers (depending on where item is sent to) when I the seller (in the UK) am not a registered business for VAT, I am a private seller and total annual sales are small and nowhere near the level where VAT  registration is required.

Regards

[papso22]

Could you please post a screenshot example of where you are seeing this VAT charged?

It shouldn't be 'sales VAT', but import 'VAT' (or its equivalent), that is charged to the buyer and paid to their tax collection department.

[4_bathrooms]

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@mango-manila wrote:

Why are Ebay UK charging varoius VAT amounts to International buyers

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Because in certain countries/territories eBay are deemed to be the supplier for an international sale. For example, if an item worth up to €150 is sent to an EU country from a seller registered outside the EU eBay is obliged to charge and remit VAT on that sale.  

[4_bathrooms]

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@papso22 wrote:

It shouldn't be 'sales VAT', but import 'VAT' (or its equivalent), that is charged to the buyer and paid to their tax collection department.

---

When eBay are responsible for charging and remitting VAT on an EU or UK sale it is supply (sales) VAT that is charged; not import VAT. This is because in such cases eBay are the deemed supplier for VAT purposes.

[mango-manila]

Good day,

My question was, why does ebay uk charge me (the seller in the UK) fees on
the VAT that they charged the international seller and remitted to the
buyers country tax system.

Regards

[sml192]

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@mango-manila wrote:
My question was, why does ebay uk charge me (the seller in the UK) fees on
the VAT that they charged the international seller and remitted to the
buyers country tax system.

---

Not quite what you asked before. 

Ebay charges fees based on the total amount paid by the buyer, including any taxes.   Whether you agree with it or not that is just the way they have chosen to structure their fees, presumably their way of recouping the costs associated with collecting and remitting the taxes.

Your previous question:

@mango-manila wrote:

Why are Ebay UK charging varoius VAT amounts to International buyers (depending on where item is sent to) when I the seller (in the UK) am not a registered business for VAT, I am a private seller and total annual sales are small and nowhere near the level where VAT  registration is required.

All sellers have to pay VAT on the fees charged by eBay.  The fees are for the services provided by eBay, nothing to do with the actual sale, so what type of seller or whether you are VAT registered is not relevant.  Everyone has to pay VAT on most goods and services. 

[viviencias]

Good day,

If what you say is true;

Ebay charges fees based on the total amount paid by the buyer, including any taxes.

Then shouldn't ebay uk charge the international buyer for additional fees for the service they have provided to the international buyer in collecting any import/VAT remitted to the buyers country tax authorities?

They charge the international buyer the import/VAT  amount required to be remitted, so why don't they just add the extra fees associated with this service to the buyers invoice (as they do with the import/TAX amount).

Regards

[papso22]

What the poster put is indeed how the fee structure works.

What ebay perhaps should do, and what they actually do, are frequently different.

[viviencias]

Good day,

Agreed.

Regards

[cheesecakefactory2014]

I am not VAT registered and the two sales I have made to Italy  and Germany recently  the customer has been charged VAT, not too sure this is correct , can someone explain, I have sold quite a few records to Japan in the past and no VAT was charged, I am really just selling my old record collection

[sml192]

Italy and Germany are EU countries.  When items with a value up to €150 are sent to a EU country from a seller registered outside the EU (business or private) ebay is obliged to collect and remit VAT on the sale at the relevant rate for the country in question. 

Sales to buyers in the EU

Goods sold in the EU are generally subject to VAT.

The VAT rates which apply differ by country and are based on the type of goods sold.

Where goods are imported into the EU, import VAT and, in certain cases, customs duty will apply. The VAT rate due at import will be the same rate as would be applied if the goods were supplied within the country of import.

In some circumstances, eBay is responsible for collecting and remitting the EU VAT.

Why does eBay collect VAT on some orders but not others, if the buyers are in the EU?

Under EU VAT Law, eBay is responsible for collecting VAT on orders in the following situations:

• When orders with a value up to EUR 150 are shipped from outside of the EU to consumer buyers in the EU (for shipments to Metropolitan France and Monaco, see next point)
• When orders of any value are shipped from outside of the EU to consumer buyers in France or Monaco

[bigbet94]

Hi, thanks for provided this. I just started selling International from UK. I had a sell from Greece, my item was listed for £29.99 and sold for £24.99, now I understand why, but what to do in this case, is like paying vat twice?

[sml192]

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@bigbet94 wrote:

Hi, thanks for provided this. I just started selling International from UK. I had a sell from Greece, my item was listed for £29.99 and sold for £24.99, now I understand why, but what to do in this case, is like paying vat twice?

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No, it's not like paying VAT twice.  Ebay removes the UK VAT as that does not apply to sales to the EU and, therefore, you are not required to remit any VAT on the sale.  

[bigbet94]

Thanks for the quick answer. But do I have to track that, or it will be on
my Ebay records when my accountant will check it? Thank you!

[myriad*seller]

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@mango-manila wrote:
Good day,

My question was, why does ebay uk charge me (the seller in the UK) fees on
the VAT that they charged the international seller and remitted to the
buyers country tax system.

Regards

---

Because eBay charge a fee on the full payment that is processed by eBay when the sale is made. Because that is what is in the terms and conditions you agreed to.