Borderfree Harrods EU VAT tax issue

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The below is a reply, on Twitter, to a query posed by an international shopper regarding shopping at Harrods using worldwide delivery from Borderfree. The comment appeared here and we tried to help by raising the issue with Borderfree. This is their answer:

Update on the 17th December, I have received another communication from Borderfree explaining their situation regarding the sales tax issue on a purchase within the EU. This is what they have said:

Where a company in the EU sells and delivers goods to a private customer in a different EU Member State, it will initially charge domestic VAT (i.e. the VAT in the country of the seller). However, once sales to that EU Member State exceed a certain threshold (normally €35k) it is required to charge VAT in the country of the recipient and account for VAT to the tax authorities in that Member State. These rules are obligatory on all companies operating in the EU under Article 33 of the Principle VAT Directive and is commonly referred to as distance selling. As sales by exceed the threshold in most EU Member States, it is required to charge VAT of the buyer’s country and therefore, the charging of non-UK VAT is correct.

Section 6 of the UK tax authority’s guidance on selling to private customers clearly sets out the rules on distance selling.

Kudos to Borderfree for explaining their answer, unfortunately this is not an uncomplicated issue, so will take a bit of time to read through the articles and understand them!





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