Kategorie: Legal Topics

Good news.
DHL and it’s workers have agreed on new salaries and working conditions.
The strike has ended.

https://www.tagesschau.de/wirtschaft/lohnsteigerung-fuer-deutsche-post-beschaeftigte-101.html

Because we have to increase the shipping fees to Austria in order to offset some of the cost of this, we want to give some more background information regarding the Austrian recycling of packaging.

Background

We are a tiny German business.
We pay for the recycling of all cardboard and plastic packaging we ship.
That is not overly expensive and we do so for a long time now.

TL:DR – Austria removed all „small business“ thresholds and requires non-Austrian EU-businesses to name a representative in addition to licensing the packaging for recycling.

Long version

With the Austrian
„Verordnung des Bundesministers für Land- und Forstwirtschaft, Umwelt und Wasserwirtschaft über die Vermeidung und Verwertung von Verpackungsabfällen und bestimmten Warenresten (Verpackungsverordnung 2014)“
(Austria love long names just like Germany does.)
starting 1. Jänner 2023 (1st of January)
we are forced to have an agent in Austria (as defined in § 16b).
That agent is to act as our representative in matters of recyling of packaging.

This is required because of:
„§ 16b.(1) Versandhändler gemäß § 13g Abs. 1 Z 5 AWG 2002 haben für ab dem 1. Jänner 2023 in Österreich in Verkehr gesetzte Verpackungen einen Bevollmächtigten für ausländische Versandhändler zu bestellen.“

That definition reads:
„Versandhändler, die keinen Sitz und keine Niederlassung im örtlichen Geltungsbereich dieses Bundesgesetzes haben und die Verpackungen oder Waren oder Güter in Verpackungen in Österreich an einen privaten Letztverbraucher im Rahmen des Fernabsatzes im Sinne des § 5a KSchG übergeben.“

The naming of that representative even has to be notarised because of
„§ 16b.(1) Abs.2 Pt 4
4. Die Bestellung erfolgt durch eine beglaubigte Vollmacht in deutscher oder englischer Sprache“

Why this law is badly written

There are no provisions for small busineses.
There are no provisions for small amounts of packaging.
There are no distictions between EU and 3rd country businesses.
Yes, that part of the law makes no sense whatsoever.
We are just glad that Austria laws are written in a language we can actually read.
With 27 EU countries, this could be so much worse.

Background info

We do pay for recycling all cardboard and plastic we buy or import.
We do send proof of the amount we licensed to the German authorities.

Sadly, there is no European licensing.
That’s obviously bad with 27 EU countries.

We have absolutely no problem doing the same for the cardboard and plastic our shipment to Austria make up.
It’s a tiny amount. Licensing it is not overly expensive and after serveral weeks of research, easy to do. The price is mainly made up of an administrative fee per license. The actual amount of licensed material is mere cents.
Just even more yearly bureaucracy to handle.

The problem

The problem is not licensing our materials for recycling in Austria.
The problem is that Austria demands a company in Austria to act as a representative.
„§ 16b Verpackungsverordnung 2014 „Bevollmächtigter für ausländische Versandhändler (Verpackung)“..“

There is no minimum or threshold anymore
They demany this the very moment any business sends a single paper envelope to Austria.
There was a Minimum business size called „Kleinstabgeber“ but is it discontinued 2022-12-31.

And enlisting with any Austrian representative („Bevollmächtigter“) is really expensive.
While the recycling makes up 40-80ct (mainly due to a minimum administrative fee),
we would have to charge an additional 8€ per delivery to Austria to offset this.

Changes

Insted of 8,8€, we will raise the shipping prices for Austrian customers by 3.10€ per parcel to offset a part of this additional cost.
Starting with February update to shipping prices because DHL lowered it’s monthly „energy surcharge“ for German destinations.
All non-recurring cost for registration will thus be paid by us (and thus by all customers collectively) and the recurring cost is distributed based on the amount of parces to Austria we shipped before the Covid-19 pandemic, supply chain issues and global recession.

With the new year, the reduced VAT rate of 16% will return to it’s usual 19%.
Therefore we will soon have to cancel and refund all orders made with 16% that can not longer be shipped (e.g. because they are not yet payed) this year.

We plan to make the required changed to our shop settings, invoice printing and our Amazon presence in two days.

This blog posting will be constantly updated to reflect the current situation.

TL:DR

• Minimum order amount of 135GBP because of HMRC, not Brexit
• You have to pay 20% UK VAT
• For goods not produced in the EU, you also have to pay customs (wasn’t part of the trade deal)

The following manufacturers are in the EU and thus free from customs (but not VAT):
Bad Wolf
FlurbMe
FurryStyle
GLC
Lizard Lars
Sidewinder Creations

Current status

• Amazon
  • Amazon.de shipping to the UK disabled (does not affect Yiffy.Toys store)
  • Amazon.co.uk disabled
• VAT
  • For Northern Ireland, the movement of goods doesn’t change. We split up the UK based on post code in our shop system to accomodate that. However DHL requires us to include customs paperwork because everything for N.Ireland is shipped through GB. There should be no paperwork or payment required by the customer. This is just for DHL temporarily storing parcels in GB.
  • Inquiry at HMRC about specifics for UK VAT invoices to implement them late in 2021
  • we are no longer required to charge 16% German VAT
  • UK requires customer to pay 20% UK VAT for imports
  • Minimum order size equivalent to 135 GBP to comply with UK VAT regulations (Not Brexit but HMRC)
• Customs and imports
  • we are adding a CN23 customs export declaration to all UK orders
  • we also added our EU EORI number and activated electronic transmission of customs export data
  • DHL has informed us that they will try to do the customs import paperwork in coordination with Royal Mail. Of cause customer are still required to do the payment part.
  • UK requires customer to pay customs fees for imports of goos not originally produced in the EU (not part of the UK-EU trade deal)

Next Steps

• early 2021 Automatically enforce that minimum order size (Not Brexit but HMRC)
• late 2021 Evaluate possibility of automatic invoice printing UK VAT complient dual-currency invoices with a tax point (date of supply) for orders below 135 GBP
• late 2021 Waiting for a solution to have UK VAT on orders <135GBP but no UK VAT for orders >135GBP.

Background: HMRC VAT regulations

According to a policy document of HMRC, above 135 GBP the customer pays the 20% UK VAT along with the customs fees. Either to the customs office or to the postal service (if the postal services did the paperwork in your name). This is not part of Brexit but a change in the VAT rules made by HMRC.

TL:DR: This requires heavy modifications to our software and processes. Mostly because of the currencies. It is likely that we will just require a minimum order to be 135 GBP.
Doing that will require a modiciation to the shop software to allow for a minimum order quantity to be country-specific.

Below 135 GBP, we would be required to pay the VAT. However doing that is not exactly easy.

1. We would have to register for a UK VAT ID in addition to our existing EU VAT ID.
2. For that we would need an very expensive british business bank account first or an explanation why we pay by debit card or (with unknown fees) credit card with no way to receive refunds that way.
3. Our invoices would have to state the UK VAT and the total sums also in british pound using the official exchange rate of the european central bank at that time (even if the invoice is printed ahead of time or a copy is printed at a later time).
4. Our invoices would also suddenly need to contain the date of shipping (that happens after the invoice is printed). Something our shop software is in no way prepared to do.
5. Obviously we would have to declare our UK taxes and pay then and keep separate records. Luckily the later can be done on paper, so we don’t need to bend a German accounting software using Euro into somehow handling this.
6. Also we would need a way for our shop software to determine that UK VAT applies only to orders <135GBP but not to orders above this threshold. Something it just can not do yet.

We have already posted the technical details we where given by DHL and Amazon and the steps we will take regarding Brexit recently.

Given the deadline getting closer, we urge everyone from the UK who intends to order any toys from our store, please to do so no later then next week. Even if there is a delay, there is likely to be at least some chaos after that date. Wheels are already in motion everwhere around us even if the Brexit itself may or may not be postponed for a few weeks or a few month or a year.
Banks, credit cards, Paypal, DHL, Royal Mail, Amazon.co.uk, Amazon.de delivering to the UK, widely fluctuating GBP/EUR exchange rates,… there are a lot of external entities we have to rely on to conduct business and everyone of them prefers to be on the safe side even if it means turning down business for a weeks or two or suddenly making their service more expensive.

Thank you.

Yes, none of us can hear it anymore but the date of a possible „hard Brexit“ is creeping nearer. We will update this blog posting as more information arrives from our the companies who’s services we use.

Amazon

A week before the possible hard Brexit (22.3.2019) we will deactivate our presence on Amazon.co.uk until is becomes clear how this is to continue.

Amazon is urging is to stockpile our products in their UK warehouse but we are too small and our UK sales too irregular to do that. We need our stock right here for our many EU customers.

DHL

Starting 26.3.2019 DHL requires us to add details customs documentation to all packages for destinations within the UK, the Isle of Man and the Channel Islands.
Delivery times for these destinations can not be guaranteed by DHL and thus also not by us.

In Case of a hard Brexit, DHL will start requiring an additional „Brexit Fee“ starting on the 2019-04-01 „or later“ for the handling. We will add that to the shipping price unaltered. The fee is an additional 10.29€ .