The price of some goods bought by people in Ireland from UK-based websites could increase by over 40 per cent from January 1st after post-Brexit taxes and charges are added to the list price, Revenue has warned.
Consumers will not only face substantial price increases when shopping with UK-based companies but they could also see a substantial reduction in the rights they have when it comes to returns or seeking redress in the event that products are faulty on not as described, the Competition and Consumer Protection Commission (CCPC) has said.
However in spite of the significant changes coming down the tracks, research published on Wednesday from the CCPC points to an alarmingly high percentage of Irish consumers who do not realise shopping on websites in countries outside the EU – which will soon include the UK – can lead to additional taxes and charges and a substantial reduction in rights if things go wrong.
The study shows that only 15 per cent of consumers are aware that buying from non-EU websites may attract higher taxes and charges and it comes as both the CCPC and the Revenue Commissioners have urged online shoppers to be mindful of the impact of Brexit on purchases they make from UK websites from January 1st.
As it stands, the UK is effectively part of the EU and as a result Irish consumers do not have to pay any additional taxes or VAT when shopping on websites based there. People also have significant protections when it comes to returns and redress if products are faulty or not as described which are enshrined in EU law.
However, all that is likely to change dramatically and quickly from the start of next year.
At a briefing aimed at raising awareness of the impact of Brexit on consumers, Ray Ryan from Revenue's Customs Division outlined three charging scenarios that online shoppers should consider when buying from a UK website from January 1st.
He said that online shoppers will not face additional import charges when buying something for €22 or less including shipping, delivery, insurance and handling charges but if the value of the goods goes above that, then VAT will be payable.
He also said that consumers would have to pay customs duty and VAT if the value of the goods was more than €150 (excluding shipping, delivery, insurance and handling charges).
Mr Ryan also explained that there are two models in place that cover payment of customs duty and VAT.
“If the total price paid for the good or goods at time of purchase includes any customs duty and VAT due, no further import charges will arise on delivery,” he said.
“If this is not the case however, the carrier or postal service delivering goods bought online from outside the EU will complete the relevant custom formalities and the amount of VAT and duties will be calculated by Customs based on the information provided. The purchaser must pay these charges to the carrier or postal service before the goods are delivered.”
He said clothes bought on a UK-based website for €167 would end up costing €236.32 once the VAT and other charges were added to the price. Consumers here would be liable to pay that with the additional charges collected by the delivery companies who will be allowed to withhold delivery until payments are made.
CCPC spokeswoman Doireann Sweeney added that consumers’ existing EU rights would no longer automatically apply when buying from a UK website post Brexit and she highlighted the need to to check where traders were located.
“EU Consumer Protection law gives Irish consumers the right to change their mind after they receive their purchases and other strong protections when buying online. At this point in time, these rights are also reflected in UK law, however from January consumers may find it difficult to enforce these rights in disputes with UK retailers,” she warned.
She said the CCPC research pointed to a need for consumers to check out the terms and conditions on the website they are buying from.
“Our research shows that while numbers shopping online from the UK are falling, only 1 in 10 consumers plan to pay more attention to where a website is based after Brexit.”
She stressed that she was not encouraging people not to shop from UK based websites but to be aware of the consequences of their decisions and the impact they might have on their rights.
Mr Ryan said Revenue had no estimates as to how much additional tax would be raised next year as a result of people shopping from UK websites but 100,000 parcels delivered from countries outside of the EU last year generated about €7million for the exchequer.