Online buyers should be aware of possible VAT attack
While shopping online can often net bargains, consumers should watch out for nasty surprises that can result from customs duties or Vat being levied on their purchases. Whether you have to pay taxes and how much you have to pay will depend on what you are buying and where you are buying it from.
If you are buying within the EU, you will be exempt from paying customs duties thanks to the EU’s customs union. The only tax that you will be liable for on your purchases is Vat.
Rates for Vat within the EU vary from country to country. Under EU rules, the lowest rate of Vat a country can charge is 15 per cent.
While Ireland’s Vat rate is 21.5 per cent, Britain charges 15 per cent (which will rise to 17.5 per cent in January).
France levies Vat at 19.6 per cent and Germany’s rate is 19 per cent.
Under EU rules, retailers can levy the local Vat rate to consumers buying online from abroad. However, if a retailer breaches a certain threshold of sales to another EU state, they are obliged to register for Vat in that country and begin charging that country’s Vat rate to buyers from that country. At present, that threshold is €35,000.
Buyers should, therefore, be careful to check that the Vat rate they are charged at checkout has not changed from the rate advertised on the site.
Once you begin shopping outside the EU, you may become liable for customs duties and Irish Vat on your purchases.
Customs duties are a percentage of the value of the goods and are charged on the total value of the sale, on top of any local sales tax and delivery charge.
If you want to find out in advance how much customs you will be charged, you should consult the EU TARIC customs database, which can be found online at ec.europa.eu/ taxation-customs/dds/ tarhome-en.htm.
If the goods you are importing are liable for Vat here, you will also be billed for this. Vat is paid on top of the customs duty, which means it will be calculated as a percentage of the value of goods, delivery and customs combined.
For low value purchases, the Revenue has a number of exemptions. When customs duty on a consignment amounts to less than €10, it won’t be collected.
In the same vein, any Vat liability of €6 or less won’t be collected. Another exemption applies to consignments of negligible values. Goods worth €150 or less are exempt from customs duties, while items worth €22 or less will not be liable for Vat.
A full list of Vat rates can be found at the EU’s website at
http://ec.europa. eu/taxation-customs/taxation/vat/consumers/vat-rates/index-en.htm
Rights of return
One of the main concerns faced by people shopping online is the fear of having to return a faulty or mislabelled product. The process seems remote and impersonal compared with purchasing a product in a shop. However, both Irish and EU law protects online shoppers against sharp practice.
The EU’s distance-selling directive also gives online shoppers extra rights over offline shoppers.
Under the principle of a cooling-off period, online shoppers can return a product to an online seller within seven days of receipt if they change their mind about the purchase; the product does not have to be faulty or defective.
