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Chapter 1 and Taxes

This is a resource for people who are using DHL Express for the first time, or who have received a delivery from DHL. We hope you find it useful. You don't have to be a business person to be an exporter or an importer. As Internet shopping becomes more popular, what is often not understood is that as soon as you hit the return key to purchase a product from another country, then effectively you become an importer and become liable for duty and VAT payments.

Customs Advice for Internet Shoppers

What goods are subject to duty & VAT? All goods imported into the UK from outside the EU must be declared to HM Revenue & Customs and in most cases, are subject to Customs duty & VAT. This includes goods bought over the Internet.

It's not always about the purchasing! If someone sends you a gift from abroad that is over 40 in value, you will also be obliged to pay the duty and VAT unless the person who sent it has agreed to pay it themselves. Likewise, if you are the person sending you need to remember that if you don't take the time to include the proper invoices then your shipment could be held in customs or the person you are sending to may be charged too much duty and VAT.

The bottom line is: If you are sending goods out of the European Union (EU) you will need to prepare aPrepare aCustoms Invoice and if you are receiving a shipment you need to know that there could be duties on top that may be billed after the shipment has been delivered. Have you received an invoice for the first time? If this is the first time you have received a duty & VAT invoice from us then you may have some questions that youd like answering before you pay it. This could be an unexpected bill and you may be unsure what it is or how it is calculated.

These charges are levied by HM Revenue & Customs and have been paid for by DHL Express on your behalf in order that we can deliver your goods.

The following invoice number prefixes all denote import duty and VAT related charges: HMC, CFS, C18, HRC, XTRI.

You may also be charged import duty & VAT on an invoice with a prefix of a 3 letter code representing a DHL UK Service Centre, followed by the initial I and 6 digits e.g. ABZI765432, BHXI876543

Please refer to the reverse of your invoice for explanatory notes on the charges levied. For further information on why you have been charged, please read the section below. Your charges explained Who is liable to pay duty and VAT charges? The person receiving the shipment is legally obliged to pay duty and VAT except where the person sending the shipment has agreed to accept these charges in the contract of sale. Private individuals intending to buy goods on the Internet from non-EU countries should be particularly careful. Often the price advertised on the supplier's website will not include UK duty and VAT and you will be expected to pay this once the shipment arrives in the UK.

How are the charges paid? We will not be able to deliver your goods to you until we have paid the duty and VAT charges on your behalf. Some businesses have their own accounts with HM Revenue & Customs and we merely arrange for their account to be directly debited by Customs. Many other importers, particularly private consumers do not have an account with Customs. We must therefore pay the charges on your behalf before we can deliver your goods to you. We will then invoice you for the duty and VAT we have paid over on your behalf. A small administration fee will be added to the duty and VAT invoice we send you.

What is the administration fee? The fee for business customers is 10 or 2% of the total duty/VAT amount incurred, whichever is the greater.

The growth of Internet shopping has led us to introduce a different administration fee for private individuals. This is because net shoppers are usually buying infrequently and purchasing low cost items such as CDs, DVDs or software. We felt that low usage such as this merited a different fee structure. We charge a flat rate of 1.25 where the total duty/VAT is less than 62.50, or 2% of the total duty/VAT incurred if greater than 62.50.

For example:

If the total duty/VAT incurred is 60.00, the administration fee will be calculated as follows: 60.00 x 2% = 1.20. However, for businesses the administration fee of 10.00 will apply as this is greater that 2%. For private individuals the administration fee of 1.25 will apply because the duty/VAT value is less than 62.50.

If the total duty/VAT incurred is 520.29, the administration fee for businesses will be calculated as follows: 520.29 x 2% = 10.41. This is the fee that will be charged as it is greater than 10.00. For private individuals the same fee of 10.41 will apply because the duty/VAT value is greater than 62.50.

Can I recover the duty and VAT charges from Customs? If you are VAT registered you may be able to recover the VAT; duty and administration costs are not recoverable.

Are there any reliefs from duty and VAT? Yes, they include: Goods of 15 or less in value (excluding postage, packing and other miscellaneous costs). This does not include alcohol, tobacco products, perfume or toilet waters. Gifts from one private individual to another providing the value does not exceed 40. (Exception: There is a very restricted gift allowance on excise goods but you are advised to contact Customs for further information) Personal effects of people returning to the EU after residing abroad Goods found to be defective or damaged or not otherwise as ordered. (Customs must be notified before qualifying goods can be returned overseas. Otherwise duty relief may be lost) Goods imported into the EU for processing and repair before re-export from the EU. (Your local office of HM Customs and Excise can provide you with further details) Note: Any goods arriving in the UK on which Excise duty in particular has not been paid will be liable to seizure by Customs

Where can I find more information? You can find more information on duty and VAT by contacting your local Customs office or by visiting the HM Revenue & Customs website. Receiving Shipments What is Customs duty? Customs duty is a tax charged on goods produced outside the EU. It is controlled by HM Revenue & Customs. The purpose of duty is to keep competition equal and fair and to bring the cost of imported goods up to the same cost as those produced within the EU. Once duty is paid, the goods are in 'free circulation' and can move throughout the EU without restriction.

What is Excise duty? Certain goods such as wines, spirits, cigars, cigarettes and tobacco are subject to what is called excise duty. When you buy excisable goods in the UK the price you pay includes this tax. However, if these goods are imported either from within or from outside the EU, you will have to pay Excise duty and VAT. The Excise duty is often more than the cost of the goods, and private consumers buying excisable goods over the Internet should be extremely careful as there are different regulations governing the purchase of these goods on the Internet.

What is VAT? Value Added Tax (VAT) is a tax normally charged on the supply of goods (and services) made by a VAT registered business. However, imported goods are also subject to VAT. This is to prevent a purchaser gaining an unfair advantage by buying non-EU goods VAT free.

Why doesn't DHL include duty & VAT charges in its tariff? These charges are not included in our tariff because the Customs authorities in the destination country determine

whether any duties and taxes are applicable when the shipment arrives. This is based on the information provided on the Waybill and Customs paperwork, in particular the contents, declared value and weight. About Duty What is the rate of duty? The rate of duty for any given product should be the same no matter into which EU country they are imported, but may differ depending upon the country of origin. Set annually by the EU, rates run from 1st January to 31st December and are published in a Customs Tariff issued by each EU country. Duty is usually percentage based, and averages between 5-9% with extremes of nil and 85%.

How is the rate determined? Goods are classified using the Customs Tariff in order to arrive at the rate of duty. The EU uses a ten digit coding and there are approximately 14,000 classifications.

What is the value for duty? Customs assess the amount of duty to be paid based on the declared value of the goods plus the transport costs to the country of destination. About VAT What is the value for VAT? The value for VAT is the declared value of the goods plus the transport costs to the country of destination plus the customs duty.

Example of Duty calculation Goods = 2 special edition CD sets Value of goods 80 + Transport to the UK 35

Total value for Duty 115 x 3.5% Duty = Total Duty payable 4.02

Example of VAT calculation Value of goods 80 + Transport to the UK 35 + Duty charges 4.02

Total value for VAT 119.02 x 20% = Total VAT payable 23.80

Therefore the total import Duty and VAT charges payable on import of these goods would be 27.82. Deferment Accounts For information about how to set up your own deferment account, please contact your local Customs office or visit the Business Link website or contact HM Revenue & Customs directly on 0845 010 9000.

For any amendments to clearances made against your deferment account, please contact DHL Aviation.

Buying Goods from other European Union (EU) Countries Within the EU goods do not have to be declared to Customs. However, Excise duty must be paid on excisable goods. DHL Express does not normally carry goods subject to Excise duty. The following table details EU member countries. EU Member Countries

Austria Belgium Bulgaria Cyprus Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta

Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom