Regardless of whether your business is VAT registered or not, you may need to be aware of the following important information regarding VAT on sales to other countries as cross-border VAT is chargeable even if the seller is not VAT registered.
Icephorm are not VAT and Duty experts but we have taken professional advice in relation to our responsibilities. However, this information is only given to guide our sellers who should take independent advice to ensure that they understand and meet all official rules that govern their trading.
Buyer Must Not Incur Additional Costs
It is a strict condition of selling on Icephorm, that business sellers must cover all VAT and Duty charges so that the buyer incurs no further costs over and above the payment made by them when placing their order. Shipping companies offer a range of services that enable the seller to meet this requirement (see Shipping Methods section below).
Business sellers are reminded of their responsibility of ownership until the buyer receives the goods and as such must use appropriate shipping with insurance. If the goods are lost, damaged, do not meet the regulatory requirements of the destination country, etc., this is the seller's responsibility.
Location of Seller’s Items
For tax reasons, it is a condition of selling on Icephorm that a seller’s items MUST be physically located in the same country as the seller’s registered address with Icephorm.
If the seller operates a subsidiary, items located in the same country as the subsidiary can be sold but the registration with Icephorm must be for this subsidiary company.
Please contact Icephorm if you require clarification.
VAT on Cross-border Shipments
In 2021, both the European Union (EU) and the United Kingdom (UK) introduced significant changes to the mechanisms for handling VAT and duty on cross-border sales. In the EU, this also included changes to cross-border sales between member nations. Some other nations have also implemented similar schemes and others are expected to follow suit. We are currently aware that Norway, Switzerland, Australia and New Zealand have schemes although each has their own set of rules.
The fundamental changes are:
• VAT relating to cross-border trades is now charged based on the destination country’s VAT rate.
• The VAT is payable to the destination country.
• There are thresholds under which Icephorm, as a marketplace, is responsible for collecting, reporting and submitting the VAT.
There are a number of factors that should be considered when shipping your orders. The most important consideration is ensuring that the price paid by the buyer includes all local taxes and any customs charges.
Other factors include the good’s destination, is the consignment value above any import VAT threshold or not, will the shipment be subject to duty, is your business VAT registered. When exporting, shipping companies have various Incoterms (internationally recognised shipping methods) available such as DAP, DAP+ and DDP. It should be noted that some methods are not suitable for some scenarios so we recommend speaking to your provider prior to shipping to ensure you are using an appropriate and cost effective method for any particular shipment.
In some scenarios, Icephorm will have to charge the buyer VAT. This VAT may be paid directly to you but if the consignment value does not exceed the applicable threshold, Icephorm will pay it directly to the relevant VAT authority. Your shipper will need to know which process was used. We show the amounts of any VAT we have charged and whether or not Icephorm will account for it directly, on the Shipping Statement we email you and online in your Sales History.
Duty Payable on Shipments to the EU and UK
There is no duty on consignments under either the EU or UK import thresholds regardless of deemed country of origin. Over the threshold, duty will be due if there is no applicable trade agreement covering the sale e.g. with a UK business selling to the EU, if the goods are of Chinese origin and no work has been undertaken on them in the UK, duty will be payable in the EU as they will not fall under the trade agreement.
As a seller, you will need to find the correct HS codes for your products. These are internationally recognised codes that determine the correct import duty rate. There are various online lookup tools including the following published by the UK government: https://www.gov.uk/trade-tariff
VAT Payable on Shipments to the EU or UK
With the EU and UK schemes, there are consignment value thresholds of €150 and £135 respectively under which the marketplace [Icephorm] is considered to be the Deemed Supplier. This is solely for the purposes of VAT and Icephorm does not take any legal title of the items being sold. Under these circumstances, Icephorm will retain the VAT element of the buyer’s payment for forwarding directly to the relevant authority. When the purchased items are shipped, the seller must confirm this using the Shipping function in the Account Manager’s Sales section. If the order is shipped in multiple consignments, it is important to confirm each consignment separately as this is used to determine whether Icephorm is responsible for paying the VAT to the authorities, or if it is your responsibility as the seller. The buyer will then receive a Shipping Confirmation email and if Icephorm is responsible for paying the consignment’s VAT this will state that the order is ‘fulfilled by’ the seller. At this point, Icephorm will also issue a Shipping Statement to you as the seller to confirm the deemed supply. The consignment value used for the threshold is the value of goods excluding transport and shipping charges unless these are included in the price.
Where the consignment value requires Icephorm to collect the VAT, it is important that Icephorm’s IOSS number (exports into the EU) or EORI number (exports into the UK) is quoted on the parcel to avoid a double VAT charge. The appropriate number will be shown on your Sales Confirmation.
Above the threshold, the responsibility for import related VAT rests entirely with the seller who is required to pay this, either through subscribing to a suitable VAT scheme or via their shipper during transit of the goods. Icephorm will correctly handle the collection of VAT regardless of whether a shipment is above or below the VAT threshold. We will always display and charge the correct amount of VAT to the buyer based on their destination country and when the shipment is above the threshold, the VAT element will be forwarded to the seller in due course.
The guidance available for goods entering the UK states that goods will have to be marked on the commercial invoices and customs declarations as VAT paid at checkout to avoid double import taxation at the border by customs.
EU Based Sellers
Where an EU based seller sells to a buyer in a different EU country, the responsibility for import related VAT rests entirely with the seller who is required to pay this, either through their VAT reporting mechanism or via their shipper during transit of the goods. Icephorm will correctly handle the collection of VAT regardless of the location of the buyer. We will always display and charge the correct amount of VAT to the buyer based on their destination country and when the shipment is above the threshold, the VAT element will be forwarded to the seller in due course.
EU sellers must be particularly mindful of their total annual sales to all other EU states as there is a €10,000 Union-OSS registration threshold over which OSS registration is compulsory. Union-OSS is a cross-border VAT scheme for EU based businesses that requires those businesses to report and pay directly the VAT incurred on cross-border sales rather than paying a shipping company.
If you are registered for Union-OSS, your Union-OSS number needs to be shown on the package when shipping from one EU state to another.
Returns & Refunds on Exports
All returns must be confirmed through your Account Manager, Sales page.
When items are being returned from overseas, there is a procedure known as Returned Goods Relief that prevents additional import VAT and duty having to be paid. However, it is important to note that this will need to be indicated at the time of dispatch from the buyer.
When refunding items previously exported to the EU or UK that required Icephorm to collect and submit the VAT, Icephorm will reverse the VAT process and send the seller a reverse Shipping Statement.
If a seller wishes to send a replacement but does not require the original item back, they should issue a refund first and then ask the buyer to reorder the item(s) so that any VAT on the original shipment can be reclaimed.
Any duty reclaims are the responsibility of the seller. These should be arranged either through your shipper.
Suppliers or marketplaces selling goods (per item rather than per consignment) of NOK 3,000 (c. £245) or less to consumers in Norway must calculate and collect VAT on their business-to-consumer (B2C) sales to Norway. There is a simplified scheme (VAT On E-Commerce - VOEC - The Norwegian Tax Administration (skatteetaten.no). There is a threshold of NOK 50,000 (c. £4.3k). Therefore, if Icephorm sells items under NOK 3,000 and the total of these exceed NOK 50,000, you must register for VAT.
Marketplaces are not required to collect VAT on any imports into Switzerland. However, businesses that supply more than CHF 100,000 (c. £80k) of low-value goods per year to customers in Switzerland are obliged to register for Swiss VAT. Low-value goods are defined as goods whose import tax amount do not exceed CHF5. This is goods valued at CHF 65 (c. £50) for standard rated goods or goods valued at CHF 200 (c. £160) for reduced rate goods.
Consignments of AUD 1,000 (c. £530) or less to an Australian non-registered consumer. The annual threshold is AUD 75,000 (c. £40k) so Icephorm only needs to register if its consignments under AUD 1,000 total more than AUD 75,000 in a 12-month period.
Goods of NZD 1,000 (c. £505) or less to a New Zealand non-registered consumer. This is per item not per consignment. The annual threshold is NZD 60,000 (c. £31k). Icephorm only needs to register if its sales of items under NZD 1,000 total more than NZD 60,000 in a 12-month period.
Domestic VAT Registration (EU and UK based business sellers only)
Aside from cross-border VAT, it is extremely important that Icephorm knows whether you are VAT registered or not and if you are, what your VAT number is. If your VAT status changes you must immediately update your details on Icephorm to reflect this. Your VAT registration details can be found in your dashboard, under Accounting.
Icephorm will automatically add VAT to the price of sales within your own country if you are VAT registered. If Icephorm does not have a registered VAT number for you, we will not add domestic VAT.
Last updated: November 2021