High in the news headlines lately have been consumers at airports refusing to show their boarding passes so that airport retailers could reclaim VAT if they were travelling outside the EU.
The issue isn’t so much against HMRC and VAT, it’s more as a protest against retailers not passing on the savings when VAT is not due on the purchase.
There’s a similar situation when selling online, especially on marketplaces such as eBay. When you list on eBay you’re obliged to list the price inclusive of VAT, however for Cross Border Trade (CBT) if someone from outside of the EU makes a purchase they’re buying at the same price as someone within the EU even through no VAT is due.
Of course if you list on overseas sites such as the US and Australia you can set your own prices and the consumer is responsible for paying any import duties and sales tax due to their government. If a buyer purchases through eBay’s Global Shipping Program taxes are collected and paid in advance through the courier.
The situation of interest is what happens when someone from outside the EU purchases from you on one of the EU websites including the UK?
I think the favourite phrase I’ve seen is “VAT is included if applicable” – i.e. if you’re in the UK the price includes VAT and if you’re outside the EU the price doesn’t include VAT.
How do you handle VAT on sales – do you consider it a Brucey Bonus when you sell outside the EU or do you manually refund the proportion of the selling price that would have been due to HMRC if it had been a sale within the EU (especially bearing in mind that eBay won’t give you any fees back for a partial refund)?
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Reduce prices – the cost of shipping or product + shipping