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Brexit duties and VAT…  June 23, 2017

Posted by WorldbyStorm in Uncategorized.
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Well now, here’s a piece in the Irish Times that points to the brave new world post-Brexit that those who shop online from the UK are about to enter. A world of higher costs – fantastically higher costs, due to VAT and customs. Those of us who purchase DVDs from the US will probably be aware of this. Already that’s a bit of a nightmare. I get a few bits and bobs a year from secondspin.com and having been caught once I have to make sure that what I buy accords to the following:

How much will these extra duties be? That will depend on the type of goods you purchase, and whether they exceed the exemption limits.

Goods delivered by post under the value of €22 won’t incur VAT, for example. And when it comes to customs, goods won’t incur such a charge if the value is under €150.

But goods worth in excess of €22 will incur VAT at 23 per cent, and, as O’Loughlin notes, consumers have no way of offsetting this.

In other words one has to ensure that an order is less than €22 in value in order to avoid VAT – actually the functioning rate is €26.08 since VAT is only collected on goods where the VAT liability is less than or equal to €6. With the euro/dollar exchange rate that can be achieved on some second hand goods. But keep in mind postage is part of this as well. There’s further complexities in terms of some goods where there is no relief on VAT.

But look, away from my woes, and perhaps yours too, there’s this much more serious set of points, starting in relation to sales from the North:

Whether small Northern Ireland-based businesses will be willing and/or able to cope with the additional costs and administrative burdens in selling to the South remains to be seen.

“A lot of this sort of trade will just cease,” says O’Loughlin. “It may be too cumbersome and difficult to trade.”

Great. And then there’s this:

With a potential mark-up of 35 per cent on clothes and duties of as much as 50 per cent on food, the future of UK retailers in Ireland looks uncertain – and it won’t be just online. After all, UK bricks and mortar retailers selling their goods in the Republic will be bringing them in from the UK, which will incur duties and VAT.

“The market is going to have to consider to see if it’s worthwhile,” says O’Loughlin.

This could be particularly true of British supermarkets, where duties can be as high as 50 per cent on food, even if most food is zero rated. Whether the Irish market can absorb such inflation remains to be seen.

And for all one has issues with the “high-streetification” (to coin a phrase) of this land there is the basic simple issue of jobs being lost. Potentially lots of jobs. Tesco alone employs 14,000 workers in the Republic and is reckoned by some to be the largest employer in the state.

As always I wonder did any of those promoting Brexit do a cost benefit ratio analysis on all this in terms of impacts on actual existing workers?

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1. Liberius - June 23, 2017

the future of UK retailers in Ireland looks uncertain – and it won’t be just online. After all, UK bricks and mortar retailers selling their goods in the Republic will be bringing them in from the UK, which will incur duties and VAT…

…Tesco alone employs 14,000 workers in the Republic and is reckoned by some to be the largest employer in the state.

I’m curious about whether any continental retail groups are thinking about Ireland, Carrefour for instance have operations in eight member states and definitely have the clout to buy-out Tesco should they wish to leave Ireland. Certainly Aldi and Lidl would probably find it easier to keep their Ireland operations going.

On the Vat and customs issue, I’d think that the sheer volume of packages moving between Britain and Ireland might make customs checks difficult to enforce; mountains of packages might force customs checks to be suspended.

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2. FergusD - June 23, 2017

“As always I wonder did any of those promoting Brexit do a cost benefit ratio analysis on all this in terms of impacts on actual existing workers?”

You are having a larff!! Of course the Brexiteers did no such thing. Firstly they don’t give a toss about workers. Secondly they are Brexiteers for existential reasons. They don’t like furriners telling them what to do (yeah I know, the UK is part of the commision/council EU parliament, but that doesn’t count!). Britain (well England) is GREAT, it desn’t need to be part of the poxy EU! The UK can trade with the rest of the world when it exits. Apparently, the EU stops us trading with the rest of the world now, who knew?. Them Gernams can sells millions of VWs etc to the USA and everywhere else but they stopped us selling Britrish cars to the world – apparently. Oh, wait, there are no major UK-owned motor manufacturers. Stil…

While I am on rant.. Ther was a rather daft BBC series with Paul Holywood, a baker from “The Bake Off”, or something, going around Europe driving their cars, fast ones. I only saw the Germany episode. It was instructive. Wolfsburg (VW) is a company town. Massive, high tech VW factories, tens of thousands of employees, must be many more component suppliers. At knocking off time it must look like Longbridge in the 70s. Brum used to be a bit like that (although behind the curve technologically and not with paternalist manufacturers). All gone! It is amazing. Meanwhile Germany, France and Italy maintained their vehicle manufacturers, albeit with difficulty in the latter cases and with increasing international co-operation with the Japanese and each other. British capitalism had moved on to finance as a means to exploit the rest of the world, and who needs those bolshy proles anyway!

So what exactly will the Brits sell to the rest of the world once they are free to do so (?!) on leaving the EU? I know, there is some good stuff (e.g. aero engines) but the UK’s reliance on financial services, especially regarding the balance of trade, is astonishing. Passporting?

BTW while Brexit is deluded nonsense I don’t have any illusions in the EU. The euro – a mechanism for Germany to screw weaker economies.

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WorldbyStorm - June 23, 2017

Yeah, it’s all pretty grim. That’s really interesting about German VW factory. Must check that out.

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3. An Sionnach Fionn - June 23, 2017

I suspect that amazon.co.uk is going to take a hit as will a lot of online British retailers who serve only the UK and Ireland market. However it all depends on the sales’ percentage of the latter. Perhaps not enough for UK online shops to worry too much about the loss of Irish buyers.

Irish – and other EU – purchases would need to be significant for largely UK sellers to create EU-portals with intra-union sales, warehousing and distribution.

My gut says, initially at least, a Britain that is even more isolated from its neighbours.

I bought €98 worth of car mats and a boot liner from a UK boutique stockist with free Irish delivery last year. I won’t be doing that again if there are crazy import charges and widely variable exchange rates on top.

As for Amazon…

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4. sonofstan - June 23, 2017

A lot of the British high street is not British – H&M, Zara, Primark, New Look, Cos….can’t see them pulling out, but the cheap and cheerful end of the market might get a bit of a kicking

….and as you go upmarket and wander around SoHo and Mayfair, the fewer British retailers you’ll find; and when you do chance across a ‘British’ label, you’ find the clothes are made in Italy and the shoes in Portugal.

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shea - June 23, 2017

was wondering that reading the article. How much stuff is made in britain or just gets a tag put on it after landing there and moving on to here.

electrics?

heard talk last year about amazon buying the jacobs factory in tallaght and a few other depots around the 26 counties. Not sure if anything came of it.

The politicians here have mentioned a few times about building up roslare and cork ports in all the brexit stuff. challenging a couple of hundred of years of thinking but there should be a way to get stuff onto the island and off it with out going through britain.

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