@ducatimondo wrote:

@marco@ebay wrote:

Hi ducatimondo,

 

I've just got an update on this, please see below.

 

eBay’s tax methodology is to remove the VAT at the rate specified by the seller on the item, and then add VAT based on the delivery country.

 

The logic for this is that if a seller has listed a VAT inclusive price, then they no longer are responsible for the VAT and instead eBay has to take responsibility.  

Example:

VAT registered Seller lists item GBP100, and indicates that they have applied 20% VAT.  As the UK works on an inclusive pricing, this means GBP100 is the VAT inclusive price (100% seller revenue + 20% VAT).

We impute UK VAT out at 20%, giving seller revenue of GBP83.33, VAT of 16.67

We then calculate the VAT payable by eBay based on the delivery address e.g. 23% based on IE buyer address.  So buyer with an IE delivery address will be charged 102.50 – 83.33+IE VAT 19.17

 

It is for this reason we ask VAT registered sellers to provide the VAT rate that they use in their pricing when listing items; if the seller provides a different VAT rate (e.g. a rate of 25% for Denmark) then we impute that rate. 

 

This is the logic that has been in place since 1 January 2021 for the UK and 1 July 2021 for the EU. 

 

Regarding VAT on postage, Royal Mail (or a similar universal postal operator) does not charge VAT.  However, the seller wouldn't be a postal carrier and so is required to account for VAT on their postage charges.  Our logic therefore assumes that a seller's shipping pricing is based on a VAT inclusive price for postage also.  HMRC have some guidance here which may be of help.

 

Please note that you will not able to reply here, as this chat is already closed.

 

Thank you,

Marco

Hi Marco,

 

Continuing on from our discussion and my question last week regarding the VAT on shipping for international items, I have quoted your reply above that came after the thread had closed.

Regarding the highlighted section above, are you really gambling on VAT for millions of transactions based on an assumption?
Allow me to clarify something for you here, that assumption is wrong in every single case.
You also mention that the seller is not a postal carrier and therefore has to account for VAT. Yes, this is true and easy, there is NO VAT in international postage for anyone at all that is shipping from the UK to anywhere that is not the UK, albeit a private seller, a business seller, a postal operator or not postal operator. This has been true for the entire UK since 1st Jan 2021. It has been the exclusive responsibility of eBay to apply this correctly since 1st July 2021

I might also add that you are also incorrect in your statement that "Royal Mail (or a similar universal postal operator) does not charge VAT"

It is more accurate to say that the retail side of Royal Mail, trading as Post Office Counters Ltd that deal directly with the public do not charge VAT on the Royal Mail products they sell, such as 1st class and 2nd class post.

We use Royal Mail 48, Royal Mail 24, Royal Mail Special Delivery, etc on our OBA account and are charged a VAT element to all of the services we are provided by Royal Mail, as we buy them from Royal Mail and not the Post Office.

It seems that eBay have no idea about UK tax law or how to implement it.

 

Back to eBay's assumption about the postage including VAT...

Are you basing this on if the item contains VAT, so the listing says 20% VAT applicable and then applying or more accurately removing 20% VAT from the postage on said item?

Or are you assuming that the postage will contain 20% VAT irrespective of the VAT status of the item. So would a 0% VAT rated item like a book or children's clothing have no VAT removed from the postage? Or would the same item, with no VAT in the item have 20% VAT removed from the item anyway, even though the product is 0% VAT rated?

Of are you basing this all on the seller's status and only removing VAT from the postage if the seller is a VAT registered business.
Are you expecting me as a seller to add VAT on all my international postage, so you can remove it, thus breaching international law?

Are you then expecting us all to over charge buyers or more accurately charge buyers VAT on postage when eBay is not being VAT controller through IOSS or the other areas such as some states of USA, Singapore, Australia, etc? I ask this as when eBay change the taxes on the item, you do not do this for all sales, only those you are now VAT controller for. This is a moving table, as you just decide to implement new ones without warning, such as recently adding Jersey into the sales you are now controlling VAT on?

 

The only way to do this correctly is to use the long time established and internationally recognised and implemented rule that there is no VAT on international postage from the UK to anywhere and not have sellers guess what ever you feel like doing on any given day, based on an assumption and without even asking us.

Can you check with your relevant team why they are making this assumption and if they plan to change to so that it works correctly; no VAT from anyone on international postage.

 

Apologies this is posted so late in the hour, I have been writting this as I can in between trying to keep up with customers in the shop and on the phone, so do not expect to be able to reply again.

Thanks 

Russ

Hi ducatimondo,

 

I've just got an update on the above from the VAT team.

 

 1) I've been confirmed that sellers are required to list their prices including all appropriate taxes and duties. 

2) Unless a seller is listing only for the export market, a seller should be including UK VAT in their item and in their associated postage prices. VAT registered business sellers are accordingly asked to list their items + the VAT rates they included on their pricing.

 

3) It is on this understanding, that when an item is shipping to an EU address from the UK, we remove a VAT value based on the VAT rate specified by a seller on the item

4) and on the associated shipping.

 

5) If a seller is not including UK VAT in their pricing, they should list with 0% VAT. eBay will then add VAT at the appropriate rate based on the delivery address.

 

Much of this information is set out on our Help Page “Your VAT Obligations” – the section on VAT calculation methodology here.

 

Please note that you will not be able to provide a reply here, as this chat is already closed.

 

Thank you,

Marco

Good afternoon Marco,

Continuing on from my post last week and as always, appreciate the reply at the end of the above.

I have broken your reply from last time into different points so that I can address each directly below:

 

1) Yes, we are aware of our obligations and do list our prices including appropriate VAT. The taxes and duties are different for shipping than they are for an item, as one is a service and the other is a product. For the UK, the item may or may not have VAT in it, certain items are exempt from VAT. The postage always has VAT in it for us, but this does not apply to all sellers as it depends in which service the seller us using to send the item and is even affected by who they are buying that service from.

2) We do not list only for export, all of our items are listed on eBay UK and have international shipping options on the majority of them. We do list our items including the correct UK VAT, albeit 20% or 0% as dictated by the item. For the UK market, all of our postage already does include UK VAT irrespective to the product, our UK shipping always includes VAT. This is not true or all sellers, see point 1)

3) Yes, this is correct, the VAT from the UK item sale price should be removed if the item is being shipped from the UK to an EU address.

4) No, there is no VAT in international postage

5) This should be determined by the VAT registration status of the seller on an account level. If the seller is a private seller, there should be an option to choose this or otherwise should be automatically determined from the eBay user’s account. So a private seller should have no obligation to tell you per account level or per item level as there is never any VAT in an item from a private seller. If the seller is a business seller, the determination should be same as the private seller, only when that business seller does not declare VAT registered status. If the business seller is declaring a VAT registered status, then the item price should be affected for VAT based on the VAT rate specific to each item listed. There is however never any VAT in international postage for any item being shipped from UK to anywhere else in the world. This is not affected by the seller’s status or by the taxable status of the item or by the destination the item is being shipped to. There is never, ever any VAT in international postage to anyone outside the UK, from anyone inside the UK

It is this last point and point 4) where the issue is and that eBay have failed to acknowledge. You keep saying that you are removing the VAT from the item and postage, there is never any VAT in the international postage!!
The VAT in the item is determined by the item and the seller, the VAT in th epostage os not, there is no VAT in international postage for items sent out of the UK.

If you or the VAT team need any additional info that will help you understand VAT and your obligations in the UK, you can find more information at the link below:

https://www.gov.uk/guidance/vat-guide-notice-700

Below you can also find more information of the Royal Mail services, where Royal Mail clearly state at the bottom of the international postage pages that “VAT is payable at the zero rate for EU and ROW destinations.“

https://www.royalmail.com/sites/royalmail.com/files/2023-04/royal-mail-business-price-guide-april-20...

Thanks Russ
------------------------------------------------------------------------------------------------------

Hi ducatimondo, thanks for getting back to me on this.

 

I appreciate the information given. However, we would stick to the above which is the information provided by the VAT team.

 

Thank you,

Marco

 

---

@ak_craft_crazy   this above is the reason

Thank you for your reply again from last week marco@ebay 

Please can someone at eBay provide to me the contact details for the VAT team mentioned  by Marco.

Thanks

Russ