Walpole's Charlotte Keesing was joined by Jane Curran, Partner - Indirect Taxes, Deloitte UK, William Bain, Policy Advisor- Europe and International at British Retail Consortium and Katie Thomas, Associate Director – Bond Street & Mayfair at New West End Company. Read on for a short report from the event.
With EU 21 changes coming in on 1st July, the luxury sector must again take to the choppy waters of our new trading relationship with Europe to navigate sweeping VAT reforms for B2C e-commerce sellers and marketplaces. This taxation shake up is the biggest for consumer transactions to be introduced by the EU, moving it toward the principle of taxing at the place of consumption with particular implications for e-commerce — and headaches for luxury retailers with vague guidance on rules for goods over 150 Euros. Major changes include launching the One-Stop-Shop EU VAT return, ending low-value import VAT exemption, the introduction of a new IOSS declaration and making marketplaces the deemed supplier in terms of VAT.
E-commerce businesses should understand what they are liable for and when, with considerations extending to goods travelling from the UK to Northern Ireland, where the Union Customs Code is still being applied. EU guidance focuses on outlining real-world scenarios thrown up by the bid to modernise VAT for cross-border commerce, but a successful transition requires stronger guidance from UK Government too to provide a full picture.
Customer experience will be another critical pivot, with consumers facing the possibility of hidden charges through VAT and duty created by the new border. What people choose to absorb in the short-term is unlikely to be sustainable long-term. There may also be necessary structural changes to businesses that flow from the deal such as creating hubs in the EU to fulfil orders or even making decisions to turn off certain markets until things are clearer.
If Brexit’s initial call was ‘how do we get our products to our customers?’, it is now about optimising supply and cost efficiency — and this will continue to be a theme going forward. However within this, it’s clear businesses will need to absorb these new rules in the months to come in order to be able to fully consider the impact they will have on their business model.
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