A no deal Brexit raises costs for products bought online in the UK
Time is running short for a deal between the UK and the EU, a no deal Brexit will have huge consequences with higher import tariffs, VAT and admin costs on packages sent from the UK to Denmark.
The article continues below.
By Bente D. Knudsen
You might already find the price of sending packages from Denmark to other countries within and outside of the EU horrendous.
They are nothing compared to the huge extra costs, which online shoppers will be subject to when shopping on popular British web sites such as amazon.uk., or when simply receiving a package from the family, which one of the more than 20,000 Brits living in Denmark most likely often do.
The reason is that if the UK leaves the EU without an agreement then packages from the UK will be subject to tariffs, VAT and administration costs as if they come from a non-EU country (which the UK will then be).
If you ever bought something from Amazon or another web shop in the US, you will know what that means.
Your purchase is subject to extra costs, which make it just as expensive or even more than if you had bought it in Denmark in the first place.
The UK is the preferred online shopping country amongst Danes and the possible consequence of a no deal will be that British online shops will experience a rapid decline in Danish shoppers due to the added costs.
The article continues below.
As the Brexit date of 1 January 2021 draws closer one consequence will be an increase in the number of products and packages which must be handled by the Danish toll and tariff departments.
Products and packages to private businesses but also to individuals who purchase products online.
In such a process, the value of whatever is in the package must be determined.
The consequences of a no deal situation will affect the amount of packages that have to go through a tariffication and toll process.
If the value is more than DKK 80, then tariffs and toll have to be calculated based on the value of the package.
This value may be visible from the outside information on it, if not the package has to be opened to determine the value of its contents.
As this incurs extra handling and work at for instance Postnord, an administration charge of DKK 160 to DKK 250 is added to the tariffs and toll incurred. FedEx informs that they charge 2.5 percent of the value or minimum DKK 145 for the handling.
Added to this is the Danish VAT of 25 percent, calculated on the value, the postage costs and the administration cost.
On skat.dk you can calculate an approximative cost of a package from outside the EU.
An example: A pair of jeans that are not subject to a tariff as the value is below DKK 1,150.
A pair of jeans bought online in the UK with a price of DKK 500 and with postage costs of DKK 50 will be subject to added VAT costs of DKK 138, so instead of paying DKK 550 the cost of the jeans will be DKK 668 (DKK 550 + DKK 138).
To this an administration cost from the logistics company for instance Postnord must be added which will bring the cost to DKK 918 ( the DKK 668 + for instance max admin charge from Postnord DKK 250).
Other example: They cost more than DKK 1,150 so a tariff cost of 12 percent will be added
Price with freight for instance DKK 1,337 (DKK 1,200 + freight DKK 137)
A tariff rate of 12 percent will be applied to the DKK 1,337 (tariff is applied with the value of the freight), bringing the value to DKK 1,337 plus DKK 160. This amount is used to calculate the VAT of 25 percent, which is DKK 374.
This means that on the purchase value of DKK 1,337, the buyer will need to pay additionally: DKK 1,871 ( DKK 1337 + DKK 160 + DKK 374).
The analysis “E-handel i Norden” made by Postnord in 2018 showed that:
34 percent of Danes who bought items online bought them in the UK, 25 percent from China, and 24 percent from Germany.
Even if an item was bought before the 1 January 2021, it will be subject to tariffs if it arrives after that date in case of a no deal Brexit.