Why your online Christmas shopping is costing more, and how to avoid this

When European Commission officials first decided the tax rules on goods coming into the EU needed to be looked at, Brexit was barely a twinkle in Nigel Farage's eye. No one could have imagined – had they even bothered to try – what impact such tweaks might have on Irish shoppers in the run-up to Christmas future.

The officials in Brussels had their eye almost exclusively on Asia when they decided to scrap VAT exemptions for goods valued at less than €22 and impose tighter restrictions on what was allowed into the EU and what was not.

But then Brexit happened and – at least for trading and tax purposes – Britain became closer to China, Korea, the US, Australia and pretty much every other country on the planet and was designated a Third Country.

To suggest that this has created a headache for Ireland’s online shoppers, businesses and delivery companies is an understatement to rival saying Covid-19 has caused a little bit of disruption to our lives.

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Almost as soon as Britain had slammed the door on the way out at the start of this year, the wheels started to come off at least some of the carriages on the ecommerce train travelling between here and there.

Since January Brexit has been behind delays in products arriving into Irish homes and businesses. Some companies based in the UK have simply refused to accept orders from Ireland, while delivery companies have struggled to cope with the mountain of paperwork that was suddenly required of them. Add to this the often swingeing charges added to sometimes small purchases from the UK by the taxman.

It was only going to get worse. VAT changes which came into effect at the start of July are behind many of the nightmares before Christmas that Irish consumers are currently experiencing.

Innocuous

Because of that seemingly innocuous and largely unheralded change, thousands of parcels bound for Ireland are now being returned to senders in the UK each week, while even more postcards, text messages or emails are being sent to consumers here from delivery companies alerting them to the fact that if they don’t pay what is owed – and pay it quickly – the products they ordered are going back from whence they came.

But first, the good news – or at least the less bad news. According to An Post, around 90 per cent of the products Irish people buy from UK-based websites are coming in without problems because the online retailers have done their homework and their systems can accommodate the fact that the goods are leaving the UK and going into the EU.

However, that does not mean the products will always still cost what they once cost. Many will cost a lot more, but at least all the required taxes and charges – and they can be substantial depending on what is being bought and how much it costs – that fall due because Britain left the EU are paid at the checkout, so delivery is seamless.

Buying anything from UK sellers has become a lottery. Sometimes it's just €5-€10 postage, sometimes that doubles or more

But that still leaves the problematic 10 per cent and, while that may seem like a small number, it amounts to tens of thousands of frustrated deliveries each week. And the problems are only going to get worse as Christmas approaches.

According to research published by AIB this week, Irish consumers were planning to spend over €25,000 a minute on Black Friday (November 27th), with more than €8,000 a minute being spent on clothes online alone. That figure is up 232 per cent on a normal day and equates to two transactions every second. A huge amount of that spending will be conducted with UK-based businesses.

Negative

Earlier this week we asked Twitter users for their recent experiences when shopping on UK sites and the responses poured in. They were almost all negative.

Gemma Lyons wanted to buy wool from a UK seller that “is registered for VAT here but [she is] still getting charged for the VAT and of course the €3.50 An Post charge”. Helen Jones, meanwhile, reported that a “relative from the UK sent my eight-year-old Minecraft socks, hat, scarf and a Roblox advent calendar. An Post charged us €14.32 in customs fees.”

Sarah Liddy “bought something from Lakeland that cost approx €50. DPD needed another €16 to release it.” Eric Glennon bought a filter for a vacuum off a site with a dot-ie web address “but got a notice for €9 off a €30 bill”.

"Buying anything from UK sellers on eBay has become a lottery," said Seán Ó Loingsigh. "Sometimes it's just €5-€10 postage, sometimes that doubles or more with charges for customs or VAT or handling, sometimes An Post let it through and sometimes they stop it. Nobody seems to know what's happening."

An Post chief executive David McRedmond is paid to know what is happening. He has been all over Twitter in recent days patiently explaining to irate customers why they have been hit with extra charges and why it is not An Post’s fault.

He also took to the airwaves to try to explain what has been going on. Speaking on RTÉ on Tuesday, he described the EU customs rules as "anti-postal" and suggested that the difficulties will cost An Post €8 million this year.

He blamed individual sellers – and those posting gifts from the UK – for not filling in the required forms correctly, and said the UK Royal Mail did not have sufficiently robust systems to deal with the new EU rules being implemented by customs authorities in Ireland.

That deficit means people in the UK are not being asked to pay charges and fill in paperwork in their local post office, which leads to massive problems with delivery here. “In the meantime, we have to work twice as hard to make sure we can get parcels to people,” he said. “All we care about is getting parcels to people, but we have to follow the rules.”

Clarifications

For its part, Revenue has been warning of the tax and customs changes for more than a year and has repeatedly provided clarifications and examples of how and why products can end up costing Irish people a whole lot more than they had anticipated.

This month it used the suitably festive example of the Christmas jumper to explain what is going on. If one was bought from a non-EU country this time last year – or indeed a country that was in the EU but is not in it this year – at a cost of €20, there would have been no VAT or customs duty attached to the purchase and the recipient would have been ho-ho-hoing the rest of their way through Christmas.

The smiles won’t be as broad this year, however, as VAT at 23 per cent will apply to the cost of the jumper plus the postage or freight cost of bringing the goods to Ireland. In cold, hard cash terms, that means the €20 Christmas jumper now comes with a €3.50 postal charge (if it is coming via An Post; it could be more if handled by another courier) plus €5.40 in VAT.

There's no issues with the vast majority of parcels coming into Ireland. It's shopping on smaller, non-EU sites or receiving parcels where some issues crop up

And of course, the higher the purchase, the harder consumers will be hit. Once a threshold of €150 is crossed duty joins the party. So, if the Christmas jumper cost €250 and there was a delivery charge of €12, then the Irish consumer would end up paying an additional €84.86 in customs duty and VAT.

It is worth pointing out that no customs issues arise when shopping online from sites in Ireland or other EU countries. (And spending €250 on a Christmas jumper is madness anyway, even if Stella McCartney knitted it herself.)

“There’s no issues whatsoever with the vast, vast majority of parcels coming into Ireland,” says An Post spokeswoman Anna McHugh. “It’s shopping on smaller non-EU sites or receiving parcels from family and friends where some issues crop up due to strict EU customs regulations.”

She says Irish customs “are imposing the strictest possible application of the new EU customs rules, so there is no avoiding them, or getting around them.”

Her best advice to shoppers is to shop local in-store or online, or shop EU to avoid customs charges. “If you shop elsewhere, the larger brands will allow you to pay all customs fees at the checkout, so you will have total peace of mind and your parcel will be dispatched straight to you.”

Notification

She also reminds anyone who receives notification of a customs charge from An Post to pay it straight away either online or at any post office. And she adds that people sending from here to there also need to be mindful of changes.

“When posting Christmas parcels to family and friends outside the EU, you must comply with EU Customs, so fill out the forms every time regardless of the size or value of your parcel. Please don’t risk posting a parcel without the necessary customs declaration as it won’t be allowed through by the customs authorities.”

While difficulties shopping on UK-based websites will infuriate many people in the days ahead, there is one obvious solution and it is one many people have already discovered: shop local.

“We are definitely seeing Irish retailers taking advantage of the changed landscape and that is one reason we are pushing shop local,” says Duncan Graham of Retail Excellence.

“Consumers know that it is taking that bit longer and costing that bit more when shopping with UK retailers, and our message is that you can get things cheaper and faster by shopping locally. And I think people are responding well to that message.”

He notes data from 2019, which suggested just 30 per cent of online spending in Ireland was with local businesses, compared with 40 per cent in 2020.

“I think that shift will continue this year and more money will be spent closer to home as more consumers look towards supporting Irish businesses. People want something different, and they have got used to shopping local during the lockdowns.”