Delivered Duties Paid (DDP)
Delivered Duties Paid (DDP)
VAT and customs duties changes from 1 January 2021 when sending to the EU
The UK has formally left the EU and the Customs Union, UK merchants can no longer collect VAT under the EU’s distance selling regime when selling an item to an EU consumer (i.e. either charging UK VAT and paying it to HMRC or, in EU member states where sales exceeded the country’s distance selling threshold, by charging VAT at the rate applicable in the buyer’s country, reporting it through local VAT returns and paying it to the tax authority of the destination country). From 1 January 2021 all sales from the UK to EU customers will be treated as exports. These can be zero rated for UK VAT purposes, as currently applied for non-EU countries, and items, depending on their value and nature, may become liable to import VAT (and customs duty where applicable) when entering the EU. Royal Mail’s services are normally delivered Delivered Duties Unpaid (DDU), where the overseas post or parcel operator will collect the import VAT (and customs duty) from the EU buyer prior to delivery, alongside a handing fee.
Royal Mail Delivered Duties Paid (DDP) service
As an alternative to DDU, we will be launching a Delivered Duties Paid (‘DDP’) range of solutions covering untracked and fully tracked services. This service will allow the UK merchant to calculate and collect from their customer at the checkout an additional amount that will cover the cost of import VAT and customs duty alongside the DDP handling fee. This will help to avoid unexpected charges and delivery delays to the end recipient, improving the overall customer experience (for details on how this will work see below). Our initial roll out will be from February 2021 for our Tracked and Signed service.
Changes to the EU’s VAT rules
In addition to the above, from 1 January 2021 customs authorities in the EU will apply customs, excise and VAT procedures to goods from the UK, in the same way that they do now for goods received from outside of the EU.
Until 1 July 2021 consignments with a value not exceeding €22 are relieved from import VAT and customs duty in most EU countries. This is called the Low Value Consignment Relief (‘LVCR’). Some member states have adopted a €10 or an even lower or nil threshold (e.g. in France it's €1 and in Sweden it's SEK 0). On 1 July 2021 the EU is set to remove the LVCR entirely. The implication of this is that from this date every single UK to EU item, regardless of value, will attract VAT (and customs duty where applicable). The rate of VAT varies by country and will be payable at the rate applicable in the recipient’s country.
|Value of imported goods in consignments**||Before 1 July 2021||As of 1 July 2021|
|VAT||Customs duty||VAT||Customs duty|
|≤ EUR 10/22||Exempt from VAT||Exempt from customs duty||VAT due in EU||Exempt from customs duty|
|> EUR 10/22 and ≤ EUR 150||VAT due in EU||Exempt from customs duty||VAT due in EU||Exempt from customs duty|
|> EUR 150||VAT due in EU||Customs duty due in EU||VAT due in EU||Customs duty due in EU|
Source: European Commission Directorate-General Taxation and Customs Union, Sept 2020
(**The threshold is generally €22 across the EU but some member states apply a lower limit)
A further change to the EU’s VAT system is the introduction of the Import One Stop Shop Scheme (IOSS) on 1 July 2021. From this date, UK sellers and marketplaces can register through an intermediary for the IOSS in one EU member state of their choice and declare in a single European VAT return all EU VAT due on goods with a value not exceeding €150 that are sold to non-VAT registered EU customers and imported into the EU after the sale. The precise details of the use of IOSS are not yet finalised but it is not expected to be mandatory.
Example of options available if you were sending a parcel to Germany
Delivered Duties Paid rate cardpdf, 95.52 KB
Our new service allows your customers to receive their items uninterrupted with all local duties and taxes paid where relevant.
- Data and customs compliant service
- End to end tracking
- Signature on delivery for 23 EU member states
- Parcel format only
- Tracked & Signed only
- DDP cannot be used to send to PO Boxes and equivalent across recipient countries
- Minimum Spend over £5k per annum
- Data – If the correct data is not provided to successfully export as DDP the item will revert to DDU
- No segregation required
- You can send items of Large Letter and Parcel Format dimensions (see format specifications below). These will all be processed and charged as a single piece Parcel, irrespective of format.
What are the ‘Parcels’ Dimensions?
A Parcel is anything that is not a Large Letter
The length plus the width plus the height must not exceed 900mm and no single dimension may exceed 600mm
For tubular or rolled packages:
The length plus twice the diameter must not exceed 1040mm but must be at least 170mm
The greatest single dimension must not exceed 900mm but must be at least 100mm
No parcel can be heavier than 2kg
What are the ‘Large Letters’ Dimensions?
A Large Letter (formally known as Flats) is considered as anything that is:
Over the size of 140mm x 90mm
Under the size of 381mm x 305mm
No more than 20mm thick
Less than 500g in weight.
- Our DDP service can only be used with an approved shipping solution
- These platforms capture and generate customs data files plus automatically create the required labels to send items abroad
- Royal Mail has shipping platforms such as †Click & Drop and †Pro Shipping or you can integrate your own system with API Shipping (†Other competitor shipping systems also available)
- Make sure you use product code MTV
Our Tracked & Signed DDP service can only be used when fully compliant customs data is supplied. Businesses will need an Economic Operator Registration and Identification number (EORI) to trade with EU countries (if a business has traded with non-EU countries, it already should have a GB EORI number). To register for an EORI number visit https://www.gov.uk/eori for more information.
With our DDP service, you calculate and charge your customer at the point of sale the cost of import VAT and customs duties (where applicable) payable to the receiving customs authorities when the goods are imported, plus a reduced handling fee. You can either use our landed cost calculator or estimate the value and then charge that to the customer along with the cost of the goods and postage and packing. Once the items have been customs cleared and assessed for tax and duty, instead of collecting these from the recipient, they will be invoiced back to you along with a small administration charge to cover the costs we incur in the overseas destination. This means your customer will not have to pay unexpected charges on receipt of their parcel and ensures that we can expedite customs clearance and minimise transit delays.
You will need to complete a customs declaration form (CN22 or CN23) for items of non-personal correspondence/goods sent abroad which must include the Tax (VAT) and duty value.
The declaration must include a description of the contents and their value. It must also show they are commercial items.
You should also include:
- Commodity codes and country of origin
- Commercial invoice
- Sender’s name and address
Sending to the EU
Prior to the 1 July 2021, our DDP service will access the EU via Germany. All goods will be customs cleared in Germany at the German VAT rate of 19%. From 1 July our DDP service will access multiple countries directly and import VAT is expected to be applicable at the rate of the destination country. Information concerning the country of clearance will be published at a later date.
Not Ready for DDP?
Royal Mail’s standard international services are Delivered Duty Unpaid (DDU) – whereby your recipient pays any taxes, duties and handling fee.
Please speak to your Account Manager for more information.
- Signed commercial invoice to be attached where possible to the outside of the item's packaging
Handling fees are applied to both DDU and DDP services, where applicable.
|Republic of Cyprus||CY||£5||€3.50|
DDP country de minimis levels where VAT and customs duties apply - dependent on classification of goods. The rates for EU countries apply from 1 Jan 2021 to 1 July 2021.
|Country||De minimis value|
|Customs Duties threshold||Tax (VAT) threshold|
|Denmark||€150 (1100 Danish Krone)||€22 (164 Krone)|
|Switzerland||65 CHF||65 CHF|
Source: International Post Corporation (IPC) De Minimis Report 2020
For further information about sending parcels please see our Parcels User Guidepdf, 2.83 MB.
Undeliverable Returns process
If your DDP item cannot be delivered (e.g. because it’s undeliverable or the recipient returns the item to the seller), it will be returned tracked right back to your local delivery office. Applying to HMRC for a refund of the UK import VAT (and customs duty, if any) incurred on re-importation will be the responsibility of the Sender and if foreign import VAT / customs duty have been incurred on the items when entering the EU, the seller or the Recipient will have to apply to the foreign customs authorities for a refund of those charges. Royal Mail will not be responsible for these.
- The price for shipping will be charged in accordance with our standard Royal Mail International service
- Any taxes and customs duties (where relevant) plus any handing fee will be collected on a separate summary invoice once customs has been cleared
- All taxes, customs duties and handling fees will be passed on to our customers when Royal Mail are charged them from the overseas post/parcel operator