New VAT rules change for EU/UK imports
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).
How will Artfinder apply these changes?
We have decided to pay all applicable sales VAT on imported goods subject to this regulation from our commission instead. This will be in place until a long-term taxation solution is implemented and customers begin to pay relevant import and sales taxes upfront with full transparency and clarity.
What will Artfinder sellers need to do?
Sellers who sold goods subject to this new regulation will be asked to include a VAT invoice with the shipment documentation. We will provide this invoice to you initially by email and later as an option to download directly from the Seller Portal.
Customers won't be charged anything extra at checkout at this stage. However, when a full taxation solution is implemented (likely in 2022) we will clearly outline the VAT payable by the customer at checkout and we will collect it on top of the artwork price, as required by the authorities.
Will Artfinder apply for an IOSS number?
Yes, we are happy to confirm we have now received our IOSS number, which will be communicated on the invoices as per the below process. This will be needed for sales invoices for shipments into the EU.
What will the process be?
1. Invoices will be created for all applicable orders (artwork value at £135 or below for UK imports and at €150 and below for EU imports from outside the EU) that were placed on the previous day. Such orders will be under review until you've been sent a sales VAT invoice and will be released soon after, so you'll receive an order confirmation email and will see the customer's address on the order page.
2. Invoices will be emailed to both the customer (for their records) and to the seller (for shipping/customs purposes) Monday to Friday (or on the next available business day for orders placed Friday/Saturday).
3. Sellers should make sure that VAT invoices are attached to the parcel so that it is clear at Customs that the VAT was collected at the point of sale.
Additionally, invoices for Sellers who are shipping from outside the EU to any of the EU countries will be showing the Artfinder IOSS number. The seller will need to provide the IOSS number to the courier (electronically wherever possible).
When will invoices be ready?
Following Artfinder's VAT registration in the EU, we have started sending invoices where necessary to artists via email. Please do now ship until the invoice has been provided to you.
How do I know when Sale VAT will apply?
We have created the handy table below for you to refer to and check when Sale VAT needs to be collected, and which documents will be supplied by us for this.
Do I need to ship with a sales VAT invoice and with a commercial invoice?
Yes. Standard rules for commercial invoices apply which would mean that you need to ship your order with both the sales invoice attached to this email and a commercial invoice with the correct harmonised code and statement of origin.
It's important that the artwork value on the commercial invoice should be always the same as on the VAT invoice - net of VAT i.e. exactly as it is showing on the sales VAT invoice.
What happens to UK/EU imports over this amount?
It's important to reiterate this is only a change to:
- imports into EU under the value of 150 EUR
- imports into UK under the value of 135 GBP
Imports to EU/UK over 150EUR/135GBP remain taxed in the same way as they were before, ie. at the point of entry to the country and NOT at the point of sale (ie. on the marketplace). The customs authorities determine the import taxes applicable at that point.
As part of our "proper long-term solution" we are going to implement an option where customers see the estimates of all taxes, including VAT under 150/135 and any other applicable taxes under or above that threshold.
This means artists should continue to attach standard documentation like Commercial Invoice with correct harmonised codes, so that the artwork can go through customs.
Regarding EORI, Artfinder (marketplace) is only becoming a "deemed supplier" of goods for the consignments below 150EUR/135GBP. The VAT invoices which will have to accompany goods across the borders will therefore have to show Artfinder IOSS / EORI number. VAT declared on these invoices as paid and collected by AF at the point of sale will be then reported on the VAT return filed via IOSS (for EU orders) and paid to the EU tax authorities (or to the UK HMRC for UK orders).
For orders over 150EUR/135GBP VAT, it is the Sellers (artists) who are suppliers of the goods. So in those cases, you should always use your own VAT/ EORI numbers in the shipping documentation.
Thank you all for your patience and diligence with this new process, we will keep updating this article with new information as soon as we have it.