The cost of Brexit for online shopping

 The transition period for the United Kingdom’s withdrawal from the EU has ended. This has implications for you if you shop online or receive gifts from the UK.

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by Louise Chamberlain

On 31 December 2020, the transition period for the United Kingdom’s withdrawal from the EU ended.

This means that the UK is no longer part of the EU single market and customs union.

If you regularly buy goods or receive gifts from the UK, you need to be aware that these packages will, in most cases, now be subject to additional charges.

There has been some confusion surrounding this because the UK and the EU came to a very late agreement on a trade deal on 24 December 2020.

The deal included zero-tariff trade, which many consumers understood to mean that they would be able to continue to purchase from the UK without incurring any additional costs.

This is, unfortunately, not the case. Purchases and gifts sent from the UK are now, in most cases, liable for Danish VAT (MOMS) and, in some cases, customs charges.

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Online Shopping

Danish VAT (MOMS)

If you order goods online which will be dispatched from the UK, you will have to pay Danish VAT if the value is over DKK 80 excluding shipping.

For purchases above this amount, VAT is charged on the price of the goods plus the shipping costs and any additional customs duty. Spirits, wine, beer, tobacco products (cigarettes etc), perfume and eau de toilette always incur Danish VAT, regardless of the value of your purchase.

Customs Duties

This is where things get more complicated.

When the new trade agreement trade between the EU and the UK was announced, there was widespread relief in the business community when it included tariff-free trade.

However, trade between the UK and the EU is only tariff-free if the goods can be shown to originate from the UK. They need to pass the “rules of origin” test, which, in simple terms, means they have to have been manufactured in the UK.

If this condition can’t be met, then, on top of VAT, you will be charged customs duties on any purchase with a value of over DKK 1,150 (excluding shipping costs).

If you order clothes and shoes from an online retailer, unless they have been manufactured in the UK, they will be subject to customs duties if the value of your order is over DKK 1,150.

For goods that have been manufactured in the UK, if the seller provides a “statement of origin”, there will be no customs duties. It is up to the buyer to ask for this certificate.

Customs duties are charged on both the price of the goods and the shipping costs. Spirits, wine, beer, tobacco products (cigarettes etc), perfume and eau de toilette, always incur customs duties, regardless of the value of your purchase.

Be aware that the calculation is based on the combined value of your order.

If you are ordering several lower value items but the total value comes to over DKK 1,150, it may be better to split your order into two smaller value shipments which are each below the DKK 1,150 threshold.

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Special duties (excise duties)
There are some types of goods that are subject to a third additional charge – excise duties (special duties).

Goods subject to excise duties include:
• Alcoholic beverages, e.g. spirits, wine and beer
• Batteries (closed NiCd batteries)
• Plastic or paper carrier bags with handles
• Chocolate, cocoa, liquorice, and other sweets
• Tobacco products, e.g. cigarettes, cigars and smoking tobacco
• Light bulbs, fluorescent lamps and neon tubes
• Disposable tableware (plates, cutlery, cups)
• Coffee, including instant coffee
• Almonds, hazelnuts, peanuts and similar
• Growth promoters and antibiotics

Handling Fees
On top of all of the charges imposed by the Danish Customs Agency (Toldstyrelsen), the carrier will often charge an additional handling fee to cover the administrative cost of obtaining customs clearance.

When your parcel arrives, the fees will be calculated and the carrier will ask for payment before releasing your goods.

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Returns and defective goods
If you return goods purchased online from a non-EU country, you can request a refund of the customs duty and VAT that you have paid as long as you do so within three months of the goods originally clearing customs.

You will need to send the following documentation to the Danish Customs Agency:
a. a copy of the original customs receipt
b. the invoice for the goods
c. proof that the goods have been returned (e.g. a post office receipt)
d. proof that you have received a refund

You can do this via TastSelv or regular by post.

The change in the VAT and customs duties situation is new and the last-minute deal means that many UK online sellers are not yet fully aware that additional charges may be applied and make no mention of them on their websites.

Some companies have suspended EU deliveries until they have a better understanding of the impact, others have stopped EU deliveries altogether.

Some larger companies have EU warehouses and can therefore ship within the EU without any additional costs. If you are in doubt, it would be wise to contact the seller directly to check where your parcel would be dispatched from.

Unfortunately, the UK’s departure from the EU has made buying from British online retailers much less attractive for EU residents.

Find out the rules when the parcel is a gift from a friend in the UK below.

Gifts

If you receive a gift directly from another private individual (that they have packed and sent themselves rather than ordered to be delivered directly to you from the supplier), they will need to complete a customs declaration and attach it to the outside of the parcel.

Gifts with a value of less than DKK 360 should arrive without incurring any charges.

For gifts with a value higher than DKK 360, VAT will be applied at a rate of 25% (payable on the value of the gift plus the shipping costs).

If there is more than one gift in the same shipment and the total value exceeds DKK 360, you will have to pay VAT on the value of the entire shipment, including shipping costs.

There may also be customs duties to pay. If the value of the gift is less than DKK 5,250, there’s a flat duty rate of 2.5%, regardless of the type of goods. For higher value gifts, a different duty rate may be applied.

If the gift contains spirits, wine, perfume or tobacco products, special rules apply.

The carrier calculates and collects VAT and customs duty and will often charge an additional administration fee on top.

If you need more information about the different customs charges that may be applicable, you can call the Danish tax office, SKAT, at  72 22 12 02 and they will advise you.