Taxes
17 February 2021

Brexit: The end of the transition period and online shopping

The coronavirus pandemic was reflected also in an increased interest in online shopping, the number of consumers who order goods from a foreign site is on the rise. Following Brexit and the end of the transition period, we come across questions buyers are asking regarding its impacts on online purchases. For example, whether they should transfer e.g. to a German version of an online platform if they have been previously using its British version.

Elvíra Ungerová

Implications as regards the import payments will be impacted by the fact whether the goods ordered via the British site will also be physically moved from the UK to Slovakia (EU). Commercial goods (e. g. goods ordered via an e-commerce platform) transported from the UK to Slovakia as of 1 January 2021 are subject to customs formalities in Slovakia, including the relevant VAT and customs duties.

Import payments

As regards customs duties, the impacts are eased only for goods originating in the UK, complying with the appropriate rules of origin as set out in the EU-UK Trade and Cooperation Agreement. Relief from customs duties can be claimed, if conditions specified in the relevant EU and Slovak legislation are met. The VAT exemption for imported goods with a value not exceeding EUR 22 will be maintained in the first half-year 2021.

In practice, e. g. the following situations may occur depending on the consignment value:

  • Relief from customs duties is applicable to goods imported in a consignment with a total value of no more than EUR 150 per consignment.
  • If the value does not exceed EUR 22, the consignment is also VAT exempt. This will however change from 1 July 2021. As of this date, all commercial goods imported into the EU from a third country will be subject to VAT irrespective of their value and new rules for distant sale of goods will come into effect.
  • If the value ranges between EUR 22 and EUR 150, the goods will be relieved from customs duties but will not be exempt from VAT.
  • If the value exceeds EUR 150, the goods are no longer free of customs duties and import VAT will be collected as well.

The above exception does not apply to alcoholic products, tobacco or tobacco products, perfumes and toilet waters. Irrespective of their value (even if below EUR 22), customs duties, VAT and potentially also excise tax will be charged. Import of these goods can be subject to further obligations and limitations. Certain alcoholic products, tobacco and tobacco products can be released by the customs authorities only if they are marked by a control excise tax stamp.

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Customs formalities

If the import of goods triggers a requirement for the buyer to file an electronic customs declaration, the recipient of the consignment must apply for registration in the Central register of the financial administration (APV CReg). The electronic customs declaration itself can be filed by a postal operator or courier service provider based on a Power of attorney.

If the customs declaration was filed directly by the recipient of the consignment, he would be required to get registered with the customs authorities and to fulfil the conditions for electronic communication for the purpose of filing the customs declarations via the designated information system.

Are the implications different if the goods are shipped from Northern Ireland?

Transactions involving movements of goods between Northern Ireland and EU member states continue to be considered (at least until the end of 2024) as transactions within the EU.

Therefore, if the goods are dispatched or transported by or on behalf of a supplier from Northern Ireland to Slovakia and the customer in Slovakia is a person who is not registered for VAT, distant sales rules will apply.

Under such circumstances, the goods will be taxed by the appropriate VAT rate applicable in the UK, or, where the sales exceed the respective distant selling threshold set by the Slovak Republic or the supplier opts to account for VAT in Slovakia, the supplier delivers the goods under its Slovak VAT number and applies the Slovak VAT on that supply.

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What to keep in mind while shopping online

As recommended in this regard also by the European Commission, it is important to read the general terms of sale and delivery conditions when purchasing online. In order to prevent a later surprise, it is appropriate to verify in advance whether the customer becomes responsible for customs formalities connected with import of the goods, whether the price calculated at checkout is the final price including international shipping fees and import payments. In other words, whether the indicated price represents a guaranteed delivery price or additional charges at delivery can be expected.

New rules governing the distant sales of goods will however apply as from 1 July 2021. You can access the summary of the new rules here.

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