Yet another EU VAT update
29 July 2021 | Andrew
Tl:dr Royal Mail were probably messing up label data until they updated their system on 22nd of July. It looks like they've sorted things now for VAT-paid-at-checkout orders, which you can place through my Etsy shop: https://www.etsy.com/uk/shop/StatuesqueMiniatures
Let's talk about EU VAT... again!
We're four weeks into the new EU VAT regime and I think it's fair to say that for the first three weeks at least, it didn't work too well.
For a VAT-paid parcel to be released from customs without further VAT being paid, it must include in its 'electronic data' a valid IOSS number. It must also be no more than 150 euro in value, and must not contain excise goods.
If those conditions are met, it doesn't even matter if the VAT paid by the customer is wrong, it will be released for delivery (any discrepancy in VAT collected at checkout and VAT remitted is the problem of the VAT-registered entity, not the EU customer). If those conditions are not met, it will be processed for VAT collection.
I've only sent a handful of Etsy VAT-paid orders this month*, but one customer has been hit with additional VAT and a fee.
That order was way below 150 euro in value and it didn't contain any excise goods – I don't sell booze and fags, just minis. So therefore the Etsy's IOSS number was probably missing from the data, at least for those packages I labelled through Royal Mail's Click & Drop online label service, or the IOSS number was included in the wrong data element and was therefore ignored during the customs declaration.
This is pretty annoying, to say the least. There was no way for me to know if the number was logged in the data but Royal Mail support assured me that it was. I spent hours on the phone to them on Friday 2nd and Monday 5th.
However, on the evening of Friday 22nd of July, Royal Mail implemented a fairly large update of their Click & Drop system. Now I can manually enter order details and the Etsy IOSS number, rather than relying on the information being passed from Etsy to Royal Mail by my Click & Drop integration. Visual indication of the IOSS status is shown by a wee IOSS logo on the label.
Given the customs procedures for VAT-paid IOSS packages (I have been reading a lot about customs procedures), I'm now confident that if I print a label and it has that wee IOSS logo, the customer will not be asked to pay VAT before delivery. As I said, even if the customer paid too little VAT at checkout, that's Etsy's problem, not the customer's.
The customer does also have the option of rejecting a package, should something have gone wrong and they're asked to pay more VAT. It would then be returned to sender and I'd refund the order when it arrived back with me. I let all my Etsy customers know this when I dispatch their orders.
Of course, there have been weeks of problems and reports from other sellers of customers being charged extra VAT and fees. I don't know how long it will take for EU customers to have confidence in the system. It's all rather disheartening and I'm sorry that my EU Etsy customers were guinea pigs while systems were sorted.
Anyway... the Summer Sale is live on the Statuesque Etsy shop, if you fancy placing an order. I'll make sure it's got that wee IOSS logo on the label.
*I had thought EU sales were holding up this month, until I realised I'd mentally reduced June's EU sales by two thirds! That's on top of the overall reduction in EU sales since January. Fun times!