What should I do to comply with Brexit regulations?
The United Kingdom has now left the European Union and the transition period binding the UK to the EU rules ended at 11pm on 31st December 2020. We have created this article to help sellers based in the UK and the EU to prepare for changes coming into force following the end of the transition period.
About this advice
This article does not constitute legal advice and we have put it together in good faith, from publicly available sources in a background that is fast changing. We will update this article with new information on a regular basis. We encourage you to also carry out your own research and share your findings with other sellers on our Seller Forum.
Suggestions? If any of the advice published on this page is incorrect or needs clarifications please do let us know by contacting us and we will do our best to review the content as soon as possible.
The UK and EU trade deal that was announced on Christmas Eve which defines the trade between the UK and EU from the end of the transition period.
Key areas of consideration
- Changes to VAT rules on services for EU sellers
- VAT changes for marketplaces in the EU and UK
- Introduction of customs duties and taxes between the UK and the EU, meaning that full customs declarations will now be required for trade between the UK and the EU.
- Expected delays to shipments between the UK and the EU.
- Shipping rates may change as a result of customs handling.
- Use Delivery Duty Paid shipments where possible.
Changes to VAT rules on services for EU sellers
According to the recent advice, the UK tax authority " HMRC has confirmed that many business-to-consumer (B2C) services will follow the same rules for both EU and non-EU customers, and will be VAT-free from 1 January 2021". This means that sellers based in the European Union (and not registered for VAT in their country) will no longer be charged the UK VAT (20%) on Artfinder services, such as the commission fees, subscription charges and promotional package sales ("Service Fees"). VAT will continue to be charged to UK sellers as before. There will be no changes in the VAT treatment to non-EU sellers. We have now added clarifying wording to this effect in our Commission and Fees Policy.
VAT changes for marketplaces in the EU and UK
VAT changes for marketplaces in the EU are coming into force on 1st July regarding imports under €150. This new rule is similar to the one which came into force in the UK on 1st Jan (for imports under £135).
Marketplaces are now required to collect sales VAT at the point of sale, on all imports into the UK under the value of £135 (as of 1st Jan 2021) and on all imports into the EU under the value of €150 (as of 1st July). These new regulations are being introduced to streamline the customs processes on increasing numbers of low-value imports into the UK & the EU. Authorities are passing the responsibility of collecting the VAT in above cases to marketplaces, and the relevant taxes must be collected at the point of sale (previously they may have been collected at the point of import into a country by their respective customs authorities).
All sellers who sold goods on Artfinder subject to this new regulation will need to include a VAT invoice with the shipment documentation. We will provide this invoice to you initially by email from July 2021 (once Arfinder is VAT registered in the EU) and later as an option to download directly from the Seller Portal.
Introduction of customs duties and taxes between the UK and the EU
Full customs documentation will be required for all commercial shipments between the UK and any EU member state (EU to UK and vice versa) to ensure swift processing of your shipments.
Since 1st January 2021, the EU-UK Trade & Cooperation Agreement has allowed preferential zero-tariffs to be applied to goods sent from the UK to the EU and vice versa, if they meet the rules of origin set out in the Agreement.
This means that customs duty is not applied for:
- Goods of UK origin exported/imported from the UK to the EU
- Goods of EU origin exported/imported from the EU to the UK
To take advantage of preferential tariffs, importers must do one of the following:
- Provide a statement of origin on the customs invoice, issued by the exporter
- Hold proof of origin (‘importer’s knowledge’) in the form of supporting documents and records
If exporters are unable to verify the origin of their goods, the importer may be liable to pay the full non-preferential rate of customs duty, and the exporter may receive a penalty, as well as being excluded from using preferential tariffs in the future.
Proof of Origin under the EU-UK Trade and Cooperation Agreement
A proof of origin statement must be included on the Commercial or Pro-Forma Invoice stating that the goods originate from the UK or the EU.
- UK-EU shipments: the origin statement on the invoice can be made out by any exporter who has a GB EORI number. The GB EORI number must be included within the origin statement regardless of the value of the shipment. Check with your courier if you do not have GB EORI.
- For EU-UK shipments: the origin statement on the invoice can be made out by any exporter where the value of the consignment is 6,000 EUR (currently £5,700) or less. Above this amount the EU exporter must have a Registered Exporter (REX) number and include it in the statement.
Our partner DHL advises to use the following text for the origin statement on the Commercial or Pro-forma invoice: The exporter of the products covered by this document (Exporter Reference No. (REX or GB EORI number)) declares that, except where otherwise clearly indicated, these products are of ....... preferential origin. (Place and date)* (Name of the exporter).
EORI number required for sellers shipping to or from the EU
EORI stands for Economic Operator Registration and Identification. An EORI number is currently needed to import or export items outside of the EU so this field already existed on most couriers' international shipment booking forms pre-Brexit. After 31st December 2020, UK sellers will also need an EORI number for shipments to and from the EU.
Gov.uk confirms that all UK sellers who trade internationally with the EU (whether they are a business or individual), need an EORI number to move goods between Great Britain and the EU from the 1 January 2021. If you do not have an EORI, you may experience increased costs and delays. For example, if HM Revenue and Customs (HMRC) cannot clear your goods you may have to pay storage fees.
We recommend that all sellers register for an EORI number as soon as possible. It is quick and simple to register and is completely free. Visit the HMRC website: gov.uk/eori – and fill in a VAT registered form or a Non VAT registered form depending on your VAT status.
Some tips on how to ship your art between the UK and the EU after Brexit
- Ship with a commercial invoice. After Brexit every shipment will need a commercial invoice, most online shipping providers (DHL or FedEx) have a feature to create an electronic commercial invoice when booking a shipment. Commercial invoices help customs authorities assess duties, taxes and asses goods suitability for transportation in and out of the country. More on How to create a commercial invoice in this article.
- Ensure clear and accurate descriptions are included with the contents of your shipments.
- State the origin of the goods, for example, if you are sending an item from an EU member state to the UK but it was originally manufactured in another country, this needs to be made clear.
- Provide the true value of the goods being transported on the shipping and insurance documentation to avoid queries with customs. If customs believe the value of goods is inaccurate and not a true market price, they may ask for evidence to prove this. This will delay your shipment and even incur additional charges. To find out the correct classification of goods please visit the UK Governments website here.
- There are no licensing requirements for importing objects of cultural interest into the UK. However, if you are importing items from the EU to the UK or another country outside the EU you’ll need to comply with the EU and individual EU countries’ export licensing regimes. The licensing authorities in the country of export will be able to advise you on what you need to do.
- We recommend contacting your courier for any further information. It's good to have a shipping provider account manager to help you. Having someone to speak to and act as a liaison to help resolve shipping queries if there is a problem can cut down the time you spend chasing shipping queries. They’ll know whom to speak to get fast answers and solutions if your goods are lost, damaged or held up in customs. We are sorry, but our team isn't able to liaise with shippers on your behalf.
Expected delays to shipments between the UK and the EU
Given the changes, it is likely that shipments between the UK and the EU may take longer than normal, especially in the first few weeks following the end of the transition period. Complete customs documentation will increase chances for your shipments passing through the border more efficiently.
Shipping rates may change as a result of customs handling
Couriers may revise their rates and surcharges as a result of customs handling. We recommend that you refer to Brexit guides published by your courier of choice and understand what is likely to change. We encourage you to ask other artists too and share your findings on our Seller Forum.
Use Delivery Duty Paid shipments where possible
We encourage our artists to ship orders with Delivery Duty Paid, enabling any customs & VAT charges to be billed back to their own account and to include this cost in their shipping table calculations. That means the sender pays the import duties & VAT and therefore, there are no surprises for customers upon receipt of your artwork. This makes international delivery of your artwork as smooth as possible.
FAQs about Brexit
With so much information out there it’s sometimes hard to make sense of it or to keep track of everything. As a result, we have created this page to cover all aspects related to the implementation of Brexit, and we will continue to update this page with every new information we receive. It is important to note that, things could change at a short, so the information below is only based on the current situation as it stands.
Who is affected?
UK artists selling to EU countries and EU artists selling to the UK.
What area(s) will be affected?
Shipping from EU to UK and from UK to EU, VAT applied on commission for EU non-VAT registered artists, charges for shipping (depending on couriers), Customs charges applied on orders sent from UK to EU and EU to UK.
When will this be applied?
Technically, from January 1st, 2021, but there may be a period of adaptation required for things to be implemented fully.
How and when will we know more?
We will carry on researching all aspects as we progress and update this FAQ page as we go to see which changes may affect you.
Shipping and Returns
How will Brexit affect my shipments?
If you are a UK based artist shipping to a customer based in the EU, and vice versa, all your shipments will now require a commercial invoice in order to be processed at customs.
This document is designed to explain to customs officials what the contents of the package are and if an additional duty or tax needs to be levied. It is very important that these documents are 100% accurate as perjury on a legal document can come with a fine or, in some cases, a jail sentence.
You will find some useful information on what is required on such a document and how this should look, along with some guides/templates from couriers, on our Knowledge Base Article here: https://sellers.artfinder.com/article/691-commercial-invoice.
It is important to note that each courier will have specific requirements for how this invoice should be displayed, and how many copies should be included, so it is important that you research this ahead of time so that you do not experience delays in shipping your orders.
Is this affecting returns also?
We will continue shipping artworks that are being returned with our partners DHL and FedEx between the UK and the EU. All returns will be shipped with Delivery Duty Paid as always, so that you are not out of pocket meaning that Artfinder will cover the cost of the shipment back to you as well as any customs & import charges.
This is already available as a service from all couriers we use so we do not foresee any change/additional work from you as a result.
Will customers need to pay Custom charges and Duty taxes?
Customers based in the UK receiving goods from the EU may be subject to pay Customs charges and Duty taxes upon receiving their artwork, unless you have opted for Delivery Duty Paid on your shipment.
Delivery Duty Paid (also referred to as DDP) is a service that some couriers provide (DHL for example) when booking a shipment, which when selected, means that any extra charges customers will incur when receiving their goods would be billed to the sender, i.e. you the seller. Not all couriers offer this option however so we would invite you to research this to check if your preferred courier offers such an option.
Although we will advise all our UK customers at basket page that such charges may now occur for their orders sent from an EU country and that they are liable to pay this charge, we would advise you select DDP where possible, as customers may sometimes refuse to pay charges in order to accept their deliveries and we would of course not want you to lose out on a possible sale as a result, if the order was returned to you.
You will find information on Delivery Duty Paid in section 3 of our Knowledge Base Article here: https://sellers.artfinder.com/article/673-end-to-end-shipping.
If you and your customer think that extra charges should not have applied towards your shipment, the customer can apply for repayment or remission of import duties here.
Will my shipments be delayed as a result?
Although this is difficult to predict, it is reasonable to expect that there will be more delays at customs for parcels coming from and to the UK. We would strongly advise you to cater for this in your estimated delivery times, as it is always better for people to have the nice surprise of their parcels turning up early, rather than later than expected.
Can I choose to only ship to countries in the European Union?
We are delighted to announce that you will now have two options for your European shipments:
- European Union
- Europe excluding EU countries
This means you no longer need to add individual countries (unless you only want to ship to a specific set of European countries for example) for such shipments. We hope this will help making shipping matters more easy for you!
Will courier prices increase?
This will widely vary depending on couriers and at this stage we are unable to confirm exactly by how much, but it is expected that couriers will now add an extra charge for their deliveries. For example, DHL has confirmed that from 1 January 2021, a fee will be levied on all their dutiable shipments between the UK and European Union countries, both inbound and outbound. With the information that is currently available, the intention is that this fee will be set at £0.25 per kg with a minimum charged amount of £4.50 per shipment. This fee may be adjusted, should circumstances change significantly.
As a result, we would advise you research if your preferred courier will apply such charge on your shipments and to update your shipping profiles/prices accordingly to cater for this. Remember that you always have an option to process a partial refund on shipping cost for you customer if you have overcharged them and you will find a step by step guide on how to process this on our Knowledge Base Article here: How can I issue my customer with a shipping refund?.
Where do I get a VAT invoice necessary for the shipment?
From July 2021 once Artfinder is VAT registered in the EU we will implement a solution through which we will generate VAT invoices and send them to all artists shipping between EU and UK initially by email and later they will be available as an option to download directly from the Seller Portal.
Sales VAT FAQ
Available on the forum here (you need to be an existing seller to view).
Where can I find more information by courier?