Brexit and E-commerce – What about VAT changes?

2020 was a year full of changes and unexpected, including one of the most interesting moves in history like Brexit. Now, this is official – the United Kingdom left the European Union for good! But this bye-bye situation came with a series of consequences for the e-commerce field like delays in parcel processing and taxation change.

Tax – A new approach

Brexit left a strong mark on the taxation system in the UK, adopting a specific fiscal regime that is applied only for them. What implies this new regime? First of all, an extra headache for merchants, and second of all, they will have to manage the taxes of each package according to its value.

How will be applied VAT tax for a package?

By taking into consideration the package’s value, there will be:

  • More than £135 – tax-free for seller, taxes and customs duties paid by buyer
  • Less than £135 – seller will apply 20% UK VAT on the entire order; tax will be paid to the UK tax authorities

Also, for all the orders under £135, it is necessary to collect UK VAT and remit it to the UK, but first of all, for doing so, it is required to have a British VAT number. For receiving this VAT number merchants have to create an account and apply for a VAT number on HM Revenue& Customs website.

Additional papers needed

Because starting with 1 January 2021 trade with the UK is considered as – extra-European trade – merchants who export to the United Kingdom will need to have the following additional papers: four copies of the customs declaration CN23 and four copies of the commercial invoice for a commercial shipment. Each of these copies has to be found inside the package, on the package and one will be kept by the merchant.

Creating CN23, are required a series of additional relevant information, such as the nature of the shipment, the contents of the shipment, who is the sender, and who is the recipient.

Other stuff required

If you want to send your products to the UK you must also attach the EORI number provided by the customs services, which is usually attached to the invoice.

On the checklist must be included the HS code too, also known as the tariff number. This is a 6-digit number used for classifying goods and calculating customs duties and taxes by countries' customs authorities.


As all of us expected, Brexit brought with it a lot of changes in terms of everything, including trade, e-commerce, taxes, and VAT. In this stage, it is mandatory to adapt and implement very quick solutions for all the changes mentioned above to continue in normal parameters the natural flow of your business.