Big changes are on the way unless the EU and the UK can quickly come to a trade agreement.
With so much focus on Covid over the last few months another huge challenge facing Ireland has almost gone under the radar somewhat: Brexit.
The UK officially left the EU on 31st January 2020 but agreed to an 11-month transition period during which the relationship between the UK and the EU would remain largely unchanged.
The hope was that this time could be used to agree a deal covering everything from fishing to trade, and financial services.
However during often acrimonious talks, little has been agreed between both sides and the UK is set to crash out of the EU on 31st December.
But what will this mean for consumers in Ireland and in particular those who are fans of shopping online?
VAT and customs duty
If you're someone who loves to shop online, things are going to be very different if you like to shop from UK-based sites such as Asos, Next and Amazon.
If the UK leaves the EU with no deal, all online purchases over €22 (including transport, insurance and handling charges) will be liable to Irish VAT, which is 23%* on most goods (though lower rates apply on some products).
However, if the cost of your goods alone is over €150 you will also have to pay customs duty too. And the rate that you pay is applied to the cost of your goods including any transport or handling fees. So if you buy clothes that cost €160 and shipping and handling is another €20, you'll be liable to pay duty on €180.
These limits apply to the whole delivery, not just one item. So if you buy two pairs of jeans for €80 each, you’ll be hit for customs duty as you've breached the €150 limit.
Customs duty varies across products considerably. Over the last 50 years, the rates have progressively decreased and thankfully many rates are now between zero and 10%. However, some goods, in particular food and agricultural products, are subject to very high rates of 30 to 50%, so expect some big jumps in food prices in your local supermarket too!
But when it comes to online shopping, one of the products we usually buy is clothes and here the rate of customs duty is 12% on most items.
Here's how a purchase might cost come January...
Let’s say you buy clothing to the value of €200 on Asos, and delivery and transport is €5.
From 1 January, you’d have to pay customs duty of 12% of €205, so €24.60.
You’ll then pay VAT at 23% on the full amount i.e. 23% of €224.60 - so €51.66.
The total you owe is then €276.26 - plus anything else An Post or a courier might charge you.
*a reduced rate of 21% applies until the end of February.
How will the money be collected?
Some of the more sophisticated retailers in the UK will operate on a “DDP” model – delivered duty paid, which means the price you see at the checkout will be the final price and will include all taxes and duties – but others will leave it to delivery companies here like An Post to collect the outstanding taxes before they hand over the goods, potentially leading to confusion among shoppers - not to mention strains on their wallets!
Indeed, because of VAT and duties, the price for some online items from the UK will simply become uneconomical for many to buy post-Brexit.
At the moment if you shop online within the EU you're entitled to certain rights under EU law.
For example, you're entitled to a 14-day cooling-off period on most goods bought online. And this applies from the date you receive the goods - not from when you make the order.
Under this rule, you don’t have to give any reason for wanting to return your goods (however you may need to pay for the return of the goods yourself).
If you want to return your goods, you are then obliged to a refund within 14 days.
However, you may not be entitled to these rights when buying from UK sites come the New Year.
What if we reach a deal?
It's still hoped a last-minute deal can be reached. However even if a deal is struck, it may not cover all products meaning you could still be liable for import duties come the New Year.
As businesses get used to the new trading regime, you can also expect some delays in the delivery of your goods as they go through new customs control procedures.
And remember, even if a trade deal is reached, goods moving between the UK and the EU will still need to be stopped and checked at times.
Can't Amazon etc just create an Irish site?
Sites like Amazon could, in theory, create a '.ie' site relatively easily but goods would still be coming from its warehouse and distribution centres in the UK so be subject to tariffs and boarder checks.
Amazon either has to build distribution centres in Ireland or consumers here have to start using the French or German sites. And while using the German site will help you avoid having to pay tariffs, you could still lose out by having to pay higher delivery charges instead as goods now have to travel further.
What should I do?
When buying from a UK site, make sure you're clear about any additional fees and charges you might have to pay. And make sure you're clear about your consumer rights.
And if possible, try shop with Irish sites or those based in the EU. And give yourself an extra few days for delivery too.