What is VAT?
VAT = Value Added Tax = sales tax.
Shipping direct to an EU customer
If you ship directly from outside the EU, you pay international delivery and your customer inside the EU will also pay any sales tax, duty and brokerage charges. The taxes are charged on total cost, including shipping.
Shipping via Kixto
Sales tax is inescapable but Kixto can make it less painful.
Within limits that don’t affect most publishers, when supplying goods from one EU country to another the sales tax can be dealt with in the country of sending, using that country’s rules. When you ship from Kixto, you can ship using UK rules.
UK rules are good for books
The UK has a special zero-rate of tax for literary works and reference books, which includes RPG rulebooks. Within relatively large limits, your books can be sent from the UK to the EU without sales tax liabilities (the full rules for zero-rating are in VAT Notice 701/10).
On most other products the UK VAT rates is 20%, which is at the lower end of the range of EU sales tax.
Save $50 per order
A typical RPG core rule book shipped from the USA to Europe is likely to rack up delivery-related costs of more than $70 (see below for how we calculated this).
Your total delivery costs on the same shipment from Kixto would be around $20. This includes bulk-shipping inventory to us, sales taxes, packaging, handling, outbound shipping, everything.
The $70 arises as follows:
- From our data, the shipping weight of a core rules book is around 3 lbs 10 oz. By USPS Priority Mail International the postage rate is $55.40
- The customs value, book plus delivery, is $45 + $55 = $100
- Germany is a large market and its VAT rates are typical. Germany’s VAT rate on books is 7% = $7 on this customs value.
- Deutsche Post customs handling fee is €6
- Total of $55 postage + $7 VAT + €6 handling = approx $70, ignoring your packaging and time costs.
(Rates checked Feburary 2019.)
What is required?
The law requires non-EU businesses to register for VAT before shipping from an EU fulfilment service.
Registering for VAT is a process Kixto can help you with. It typically takes 2 to 4 weeks. Once registered, you must periodically submit a sales tax “return” and pay taxes due.
For most businesses shipping from the UK, the VAT due on EU sales is:
- zero for qualifying books,
- 20% for everything else (standard-rated goods),
- for shipping charges, the tax rate follows the rate of the contents.
Values to use
When you ship inventory to us, it’s normal to use your cost prices on your shipping invoice. When the import clears UK customs, you’ll be charged VAT on that amount.
On each shipment to a customer, the VAT is worked out on what the customer actually paid for the contents plus shipping (the tax rate on shipping follows the rate of the contents).
If you sell standard-rated goods with tax included, take what the customer paid and divide by 1.2 to get the pre-VAT value.
When you file your VAT return, you will:
- state the total of VAT due on your EU sales, typically 20% of non-book goods and shipping,
- state the total of VAT you’ve paid on costs, for example the VAT you paid at import,
- pay the net VAT due (VAT due from your sales minus VAT you’ve paid on your costs).
For example, if your VAT due on sales is £200 but you paid £50 on import, you then pay £200 – £50 = £150 with the VAT return.