There’s still a lot of uncertainty about how Brexit will affect online commerce, but for now we do know that there will be some meaningful changes to how things are sold between the UK and the EU as well as some substantial new burdens on artists, labels and fans in the EU and the UK.
We’ve outlined some of them below, but you should also engage a tax expert if you have any further questions about your specific situation.
First, the good news: for digital sales, you won’t need to do anything. We’ll continue to collect EU and UK VAT for all digital purchases, and remit the tax directly to the appropriate tax authorities.
Now, the bad news: from January 1, 2021 to June 30, 2021, artists and labels in the UK will have to adjust to some meaningful changes around VAT collection and customs treatment for merchandise sales to fans in the EU.
There are a few ways you can handle this, including registering for and paying for VAT in each EU country you have customers in or moving bulk inventory into the EU for later fulfillment, both of which may make sense for larger sellers. We recommend you speak with your tax expert about how to handle this if you have not already done so.
For most artists and labels, the simplest solution for the first six months of 2021 is to make your customer the “importer” of the goods. To do this, you’ll need to prepare the appropriate customs documents for sales made to buyers in the EU. These sales to the EU will be considered “zero-rated”, and the customer will have to pay the VAT and other fees on receipt at their local rate. This may involve the customer paying the couriers directly, or having to settle the VAT before receiving the goods.
We’ll notify buyers in the EU about the potential additional costs during the checkout process, and also include a reminder in their receipt. You may also want to include information about this in your item description as well, or notify them before fulfilling the order.
By July 1, 2021, the UK and EU should (hopefully!) have a deal worked out that will allow Bandcamp to collect and remit the VAT directly to the customer’s on their behalf, which we will happily do when possible. Stay tuned for more details.