BREXIT: Shipments of goods involving an Online Marketplace (OMP)

VAT & Online Marketplaces after BREXIT

For VAT purposes, from 1 January 2021, all sales of goods to the UK by a foreign seller and facilitated by an OMP will be treated as a “supply of the goods in the UK to the UK consumer by that OMP” if those goods: are imported and the value of the shipment is less than GBP 135 or delivered from a UK location, in the latter case the value of the delivery is irrelevant.

As a result, the OMP is responsible for collecting and paying VAT on the sale to a UK customer. The supply from the foreign seller selling through the OMP will not be treated as a supply to a UK consumer. Instead, if the goods are already in the UK (i.e. for which import VAT has already been paid), the supply of the goods to the OMP is assumed to have taken place at a zero VAT rate. Therefore, the foreign supplier must register for UK VAT in order to reclaim any import VAT incurred when importing shipments of goods (over GBP 135 in total value) into the UK. For UK VAT, the delivery will be treated as follows:

• If no OMP is involved in facilitating the sale, a delivery will be made directly from the seller to the consumer, which will be deemed to be in the UK and thus subject to UK VAT.
• If an OMP is involved in facilitating the sale, the OMP is considered to be supplying to UK consumers for VAT purposes.

In either case, the value of the goods for VAT purposes is based on the price at which they are sold to the consumer, rather than on a valuation calculated at the time of import.

For goods that are abroad at the time of sale, the new rules apply regardless of where the OMP or company selling the goods is located. So even if a seller were to sell goods to a British customer via, for example, a Chinese platform such as Aliexpress, Aliexpress is responsible for the payment of VAT in the UK.

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A different situation applies to goods imported into the UK for sale to consumers. Businesses based outside the UK selling goods to UK customers where the goods are already in the UK are already subject to UK VAT under the existing rules. Such companies should already be VAT registered. For VAT purposes, such a supply will be treated as follows from 1 January 2021: If no OMP is involved in the sale, there will be a delivery directly from the seller to the consumer, which will be deemed to be in the UK and thus subject to UK VAT. If an OMP is involved in the sale, the OMP for VAT is deemed to be supplied to the UK consumer, and VAT on the sale is paid by the OMP.

In both cases, the value of the goods for VAT purposes is based on the price at which they are sold to the consumer.

Also for goods that are abroad at the time of sale, the new rules apply regardless of where the OMP or the company selling the goods is located.The OMP model applies to the supply of goods regardless of the value where:

• The goods are owned by a seller located outside the UK;
• The goods are in the UK at the time of sale;
• Seller sells the goods to a customer in the UK through an OMP
• It concerns a consumer, or an entrepreneur not registered for VAT.

The application of the OMP model to goods already present in the UK has the following consequences:

• Existing VAT and excise duties apply to imports;
• UK VAT is payable when the sale of goods takes place as it is now, but the change here is that the OMP is deemed to be the supplier and thus responsible for the VAT on sales it facilitates through its platform. This means that for VAT purposes the seller, operating through an OMP, will no longer supply to consumers in the UK.
• When the goods are sold to the customer, the foreign seller is expected to supply the goods to the OMP with a zero rate.