VATLive > Blog > Europe > UK-EU trade deal won’t save e-commerce from tariffs

UK-EU trade deal won’t save e-commerce from tariffs

  • Dec 13, 2020 | Richard Asquith

UK and EU ecommerce sellers will still face import tariffs even following the EU-UK Free Trade Agreement. For many, this will mean double taxation: UK and EU customs duties on the same inventory. Sellers on major marketplaces hold the biggest exposure as they are obliged to clear their goods into the EU or UK by the platforms ahead of any selling after 1 January 2021.

Since many UK and EU sellers have imported their inventory from China or elsewhere into their domestic stores, they will not be counted as originating from the UK or EU under customs ‘rules of origin’. Shipments to EU consumers from the UK, and vice-a-versa, will therefore still subject to EU or UK tariffs.

Marketplace sellers at most risk of tariffs

There will be relief for smaller packages under the UK and EU’s customs thresholds of £135 and €150, respectively. However, this will not protect sellers on major marketplaces, such as Amazon and eBay, who are now required to clear their stocks in advance into the UK or EU before selling on platforms. They will be over the customs exemption tariff and will therefore be subject to customs duties if they cannot show the goods originated from the UK or EU.

To understand possible UK or EU tariff charges, contact Avalara for a free audit of your goods listings.

What are rules of origin and tariff rules?

Customs use rules of origin to classify where goods originate from and to help identify those which qualify for lower or nil Customs Duty. They seek to prevent importers by-passing tariffs by channelling shipments through third countries which have low or tariff-free deals with the country of import.

The importer has to declare at customs the origin – ‘economic nationality’ - of their goods. This involves determining the good’s value and where the contributions were made in adding value to the final product. Typically, and importer must show over 50% of the components of any goods originate from the exporting county. 

Consider redirecting your ecommerce supply chain

To avoid the customs charges risk, the best option is to initially clear your goods directly into the EU or UK from the source country. This would cut out the risk of initial tariffs and double taxation. However, it does require you to hold two sets of inventories, cash flow burdens, plus managing returns and obsolescence at two sites. 

To understand possible UK or EU tariff charges, contact Avalara for a free audit of your goods listings.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: richard.asquith@avalara.com. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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