Confused about UK to EU Shipping? A helpful guide for small businesses
UPDATED: 30/06/21 includes IOSS
It’s probably really important to mention straight away that I am not a Royal Mail, Government or any other Trade representative. I created this guide with my own research in hope that it helps other people in the maker community. All of my research is based on sending from England, Scotland and Wales; there might be different information for Northern Ireland.
Hello, I am Beck and I am a designer and maker of my own business Priormade and also the owner of a retail shop called Prior Shop. Priormade, is a modern and eco homewares brand and Prior Shop is a creative hub of 45 other modern eco brands. Both my businesses ethos is to sell beautiful, functional products that are made as responsibly and as sustainably as possible.
I send my products to customers all over the world and was really struggling to find information about post Brexit shipping. I have a Royal Mail and UPS business account and between my account managers, online research and spending hours on the phone I pieced all of the information together myself. I shared the information via an info-graphic in February 2021 on Instagram. I couldn’t believe how many people were just as confused as I was…
Free movement of trade = every parcel is strictly checked.
We have left the EU and we do not have the free movement of goods anymore. This means that every single package that crosses a border will be strictly checked. To continue to ship internationally it is important to have a strong and clear shipping strategy. It is our responsibility to ensure that we have everything in place so our packages go through customs quickly and smoothly. If your parcel hasn’t got the correct documents it can get lost, returned to sender (at a cost) or even destroyed! Having the correct documents means your customer can also challenge the customs charge if they feel it has been incorrectly given. I know it seems really daunting at first but once you have this all set up, it’s actually super easy!
It’s all about the VAT.
As there is no free movement of goods from the UK to the rest of the world, the customer will have to pay Import Tax. This amount varies from country to country. If you are VAT registered, all online sales and exports between the UK and EU/Rest of the world are now Zero VAT. This means that you do not charge the customer VAT at the point of sale, but they pay a Customs Tax of a similar amount on delivery.
So in theory, if a customer is purchasing from a VAT registered businesses the price increase is only small as they've purchased it 20% cheaper but are paying that 20%* on delivery. However, if you are a smaller business that isn’t VAT registered, unfortunately the customer will still pay your full retail price (which is technically Vat free) and the Import tax on top; making your product at least 20% more expensive.
What is DDP, PDDU and IOSS shipping?
We have various options to post to the EU.
1. DDU - Delivery Duty Unpaid
We are currently posting Delivered Duties Unpaid. This means that when the customer orders online, they are not charged VAT. When the parcel arrives at the destination county's boarder, the customer is then charged VAT, a customs charge (if over 150€) and a handling fee.
2. PDDP - Postal Delivery Duty Paid
Lots of couriers including Royal Mail are working on a service called Postal Delivery Duty Paid (PDDP) . This is where you (the seller) calculates the EU VAT and custom charges at checkout. The customer doesn't get any extra charges and the parcel is delivered smoothly. You pay Royal Mail the EU VAT and they pay it for your. They hope to launch this in July 2021.
If you need help calculating the VAT, you can integrate a 'cost calculator' such as Aura from Hurricane .
This is great if you small and irregular volumes of sales to the EU, and also great for goods over €150
3. IOSS - Import One Stop Shop
IOSS is like PDDP as the customer will pay the VAT at checkout and the parcel doesn't obtain any customs fees. It is only available for orders under 150 €. It is an EU system and you (the seller) must register for EU VAT via setting up IOSS Identification number.
3. a - Setting IOSS independently: To create an IOSS Identification number, you will need to register for EU VAT using an independent EU-established intermediary. You can then set the tax charges for each country within your online shop (*Shopify allows you to do this). This means that the customer will be charged the rate for their country at checkout. You will collect the payment and then are required to submit monthly EU VAT returns. Within Click and Drop you will save your individual IOSS number alongside your EORI number (more about that below). You cannot do this at the Post Office, it must be electronic via Click and Drop.
*If you have set up an IOSS ID independently please let us know how you did it in the comments below. This option seems like a lot of paperwork for small businesses.
3. b - IOSS through an electronic interface: To make life a little easier, you can sign up via a platform such as Taxamo or Deloitte who manage everything for you and you use their IOSS number in your shipping data field (Click and Drop account).
Costs: Taxamo charges £2 per parcel (great for people sending less Thant 3000 parcels to the EU a year) and Deloitte (for larger businesses) which requires a £2000 yearly fee! Taxamo doesn't currently intergrate with Shopify though but are working on it!
3. c - IOSS through an online marketplace: If you sell via Etsy, NOTH, Amazon, eBay etc, they are your 'interface portal'. They automatically charge the customer the EU VAT and then pay the EU VAT for you. They have their own IOSS number for you to add ti your shipping data field in your Click and Drop account. If you use their postage labels then they include the number for you! If you sell via an online marketplace and your own website, then you need to set up a separate IOSS for that Trading Name on Click and Drop.
Cost: Fees are taken through each sale plus 10%. It is not available for orders over 150€.
If you have charged EU VAT at checkout, you MUST include a correct IOSS number via Click and Drop/ other postal service. If it isn't a registered IOSS ID the customer could be charged VAT again at delivery as customs will not know that the VAT has been paid.
*PLEASE BE AWARE- IOSS is not mandatory! You can continue to sell via DDU and the customer pays the charges on delivery. I am personally continuing to post to the EU and making sure my customers are clearly aware of the pending charges before I post. I think I will then use Taxamo for orders under 150€ and PDDP when Royal Mail launches this in July.
* You do not have to be UK VAT registered to register for EU VAT.
* Orders over 150€ you cannot use IOSS for and the customer is responsible for VAT or you use DPPU when Royal Mail launches that in July.
Larger parcels: For larger orders, sign up to CSM logistics. They work with UPS and Parcelforce to ship larger parcels. I posted a large 10kg parcel to the EU, it took 4 days to arrive and I (the sender) was sent the invoice for the Duty and Customs charges. The booking form isn't particularly user friendly but the CSM team are available to help via email/phone.
Parcels under £270 need a CN22 and over £270 a CN23 form. These can be filled out manually at a post office or automatically via Click & Drop.
It's a legal requirement and essential that you truthfully and accurately declare the items being sent.
Electronic Customs Data : Post Office vs Online Click and Drop.
It’s all very well having the CN22/CN23 but if it isn’t correctly submitted electronically, there will be issues at the boarder. We all want to support our local Post Offices but unfortunately some Post Office staff are not filling out the electronic customs data correctly and parcels are being detained, returned or lost.
I personally recommend using Shopify and sign up to Click & Drop. By using Click and Drop, your CN22 form is submitted electronically. If shipping regularly to the EU, I would recommend using both of these platforms to make your life so much easier!
On Shopify you can save the HS code and Country of Origin within each product.
CLICK & DROP
In Click and Drop you can save your business name and address, your EORI number and Country of Origin in 'Settings - Customs information'. This will be imported to your CN22 along with the product name.
When creating the postage you then have two options:
1. Add a further description (something you can't do on a manual CN22), the individual weight of each product in the package and the HS/Tariff code (copy and paste from Shopify/record).
2. If you click on the PRODUCT tab in Click & Drop, you will see a list of your products if you have integrated your website. If you haven't integrated, here you can add each product with all the relevant customs information. This means every single time you have an order, all the information will be exported into your CN22 automatically.
As with all post there might be delays and things lost. I choose to send orders tracked (including international) to make sure I can find where a missing parcel is in the system. You can also see if it has made it to the destination country and if it’s delayed because the customer hasn’t yet paid the custom charges. Also there are benefits like sending items that are otherwise restricted (see below)
What will the customer pay?
Right now, all items under 22€ are exempt. However this will change on the 1st July 2021 and all items will be subjects to Import Tax.Orders between 22€ – 150€
Orders over 150€
There is the Import Tax 17 – 21% and courier handling fee, plus a Customs Charge. I believe the average customs charge is around 5% but this varies depending on the country and the product.
It’s always a great idea to email your International customer to make sure they have read your shipping policy. Make sure you have a clear shipping policy on your website!
Check the destination country’s restrictions
Each country has their own restrictions and some will only let certain products over the border.
France for example are very strict. You can’t send perfumes, aerosols and liquids over 1L. It also seems there is a limit on jewellery, glass and glassware, and wooden articles too. Yes Sweden has hardly any restrictions at all! If you have a business account and send the parcel ‘International Tracked’ you can bypass some of the restrictions. Germany for example you can send aerosols with a business account.
To check if your goods can enter the destination country, see the Royal Mail guide here .
It's called 'E-commerce' if selling directly to your customer
It's called 'Exporting' if selling your work wholesale.
If you are shipping to a business to resell like a shop or gallery it is called EXPORTING, you must also include in an envelope or clear wallet on the outside of the parcel:
- On headed paper, a letter that declares the Country of Origin:
- " I, Rebecca Prior of Priormade Ltd, exporter [EORI number] declares that, except where otherwise clearly indicated, these products are of United Kingdom (UK) origin. We are exporting to [business name and address] with the EORI of [xxxx].
- Signed and dated
- Invoice showing ZERO VAT has been charged.
- Packing slip of the contents (if different to the invoice).
PREFERENTIAL TREATMENT: Something people are not often aware of is that goods with a UK and EU origin have a zero tariff for customs duty. VAT still applies but clear documentation will mean the importer will not have to pay the extra Customs Duty on orders over 150€
Sending work to an EU Gallery
If work is being used for a temporary event and ALL of the work will be returned, you can fill out a form to declare it as a temporary export. This means you do not have to pay import fees when it is returned back to the UK. You can fill out the form here.
I’m not sure how this works with SoR because if some of the work is sold, parts of the original order will be missing so the temporary export might not be valid. I’ve tried to research this but haven’t been able to find the answer.
As long as goods are in the same condition and not altered in anyway, the customer should clearly write RETURN TO SENDER on the package and pop it back in the post. You can decide whether you send them a prepaid label or if they are liable for the return postage cost. When the parcel is re-imported, the business (you) can apply for Import Duty Relief. You have three years from export to import to apply. Images, proof of postage and proof of sale will be needed.
You can fill out the form here
Government funding and support for EU shipping
There is some government funding to support businesses through this transition. To find out if you are eligible click here
Business west run various courses to help people in more depth. View what they have available here.
I hope this information has been helpful. As I mentioned to start with I am not a Royal Mail representative and I do not have all the answers. All of this information is online in various places but I've just pieced it all together. Everything I've written above might change so please always check with the courier you are using and the gov.uk website to find out more information.
If there are any edits or information that needs changing, please leave a comment below! I appreciate the feedback.
I created this blog in my spare time in hope it helps my fellow small business owners. I would be so grateful if you could head over to Priormade and Prior Shop on Instagram and give them a follow. Perhaps have www.priorshop.uk in mind for your next gift purchase? I would be so chuffed!
- Beck Prior x
- Royal Mail introduction to IOSS and DPPU
- Step by step - Where to put IOSS number in Click and Drop
- FAQ's from Royal Mail IOSS set up
- How to fill out your CN22 - Royal Mail