Overseas retailers' GST guidance notes

Application of GST to the Importation into Jersey, by Non-Business Persons, of Unaccompanied Parcels from 1 July 2023.

Introduction to GST for overseas retailers

The States of Jersey Assembly introduced new legislation in the Finance Law (Budget 2022) (Jersey) Law in relation to the application of Goods and Services Tax (GST) to goods imported into Jersey by private individuals where those goods are imported unaccompanied by the importer. In other words, the goods are ordered from Jersey by the customer and are despatched by freight or post by the seller.

The purpose of the legislation is to enable high street retailers in Jersey (who must charge GST on almost all sales) to be more competitive and also to mirror similar legislation introduced in relation to VAT in the UK and the EU during 2021.

In simple terms:

1. Where retailers trading outside Jersey sell goods to consumers in Jersey (online, through brochures, magazine sales or others) and where the value of such sales by any retailer to consumers in Jersey exceeds £300,000 in a rolling 12 month period, such retailers will have to register and account for Jersey GST on all these sales.

2. All goods imported unaccompanied by private individuals into Jersey, from 1 July 2023, if GST has not been accounted for at point of sale, will be subject to GST where the value of the imported goods exceeds £60. This threshold is being reduced from £135 and will eventually be removed altogether.
   

When purchasing goods from overseas retailers who become registered for GST, Jersey consumers will pay GST to the supplier (vendor) at the point of sale. The goods will then be imported to Jersey with no requirement to pay tax at the point of entry.

Overseas retailer legislation

The Finance (Budget 2022) (Jersey) Law made the necessary amendments to the Goods and Services Tax (Jersey) Law 2007. The commencement date was changed from 1 January 2023 to 1 July 2023 in the Finance (Budget - Cost of Living) (Jersey) Law 2022.

Practical effects of the legislation

The practical effects of the new legislation will be felt by consumers, carriers and some overseas retailers.

In this guidance, a 'consumer' is a private individual, or a non-business purchaser.

Consumers will see the benefit of the new legislation in that any purchases from overseas retailers who are registered for GST in Jersey will not be subject to GST at importation and this will facilitate faster delivery of goods (GST will be charged at point of sale).

Purchases imported from overseas retailers who are not registered for GST in Jersey will be subject to GST at importation, as is the case under current law. In relation to online purchases from overseas from unregistered vendors, the value of the goods which can be imported free of GST will reduce to £60 from £135 with effect from 1 July 2023 (and this threshold will eventually be removed altogether).

Carriers will also feel the benefit of the new rules as the quantity of parcels which will require to be held pending payment of import GST will reduce. Those parcels being sent from overseas to Jersey consumers by GST-registered retailers will no longer require detention for paying GST. It is anticipated that this will lead to a significant proportion of parcels being fast-tracked through import.

Certain overseas suppliers will be obliged to register for GST and this will create, for them, an obligation to comply with Jersey GST legislation, notably in relation to registration, filing of returns, payment of the tax and record-keeping.

Who must register for GST

Any overseas retailer, or online market, who sells goods to non-business consumers in Jersey and those goods are despatched from an overseas location to Jersey, must register for GST in Jersey if their turnover from such sales exceeds, or is likely to exceed, £300,000 in a rolling 12 month period. Such persons may opt to register for Jersey GST even if they do not reach the statutory threshold but registration is mandatory for those who do.

Overseas retailers will include sellers who supply goods in response to orders taken on their website, a third party website or through catalogue or similar sales. The essence of such a business is that it does not have a physical presence in Jersey but supplies and transports, or arranges to transport, (or is an online marketplace that facilitates the sale of goods from an overseas supplier to a private individual in Jersey) goods to private consumers in Jersey where those goods have been ordered and paid for by, or on behalf of, those consumers.

An online marketplace is defined in the GST legislation and it means a website, or any other means by which information is made available over the internet, which facilitates the sale of goods through the website or other means by persons other than the operator (whether or not the operator also sells goods through the marketplace).

An operator, in relation to an online marketplace, means the person who controls access to, and the contents of, the online marketplace provided that the person is involved in:

• determining any terms or conditions applicable to the sale of goods
• processing, or facilitating the processing, of payment for the goods
• the ordering or delivery, or facilitating the ordering or delivery, of the goods

An online marketplace facilitates the sale of goods if it allows a person to:

• offer goods for sale
• enter into a contract for the sale of goods

Registering for GST

Overseas retailers and online marketplaces will be able to register for GST online and the Revenue Jersey online registration system will facilitate this.

It will be possible for early registration to be put in place but only becoming effective from 1 July 2023.

Charging GST

The rate of GST applicable to the supply, or importation, of nearly all goods (excluding prescribed medicines which are zero-rated) in Jersey is currently 5%. Overseas retailers and online marketplaces who are obliged to register for GST because their sales to Jersey consumers exceeds, or is likely to exceed, £300,000 in a rolling 12 month period should charge the customer GST at the point of sale where the goods are being sent to Jersey.  The GST will then be included in the amount paid by the consumer to the vendor, or the online marketplace as appropriate.  

Where a vendor is obliged to register for GST because their annual turnover from sales to unregistered persons exceeds £300,000, all sales by that vendor to customers in Jersey will be subject to GST at the point of sale, whether the customers are private individuals or business customers. It is important to remember though, that the obligation to register only arises where the sales to private individuals exceeds £300,000 per annum.

GST registered online retailers and online marketplaces will need to register an account on CAESAR, the Jersey Customs Freight Handling System. After completing the account registration step the business representative will need to apply for 'business based outside of Jersey registered for GST status', indicating that the account is for a business based outside Jersey and registered for GST purposes. The online retailer or online marketplace can also optionally provide its Import One-Stop Shop number.

GST returns in Jersey are usually filed quarterly. The supplier is obliged to file the GST return by the end of the month following the relevant calendar quarter. The tax due must be paid by that date also. Filing of returns is done online and the tax is payable by electronic bank transfer.

If the GST registered supplier incurs GST in Jersey in connection with sales which are subject to GST, the supplier can take a deduction in the relevant return for the GST incurred, in the normal way.

Valuation of goods for GST

Goods that are despatched from the UK to Jersey move within a customs union which exists between the two jurisdictions. The effect of this is that when the goods arrive in Jersey, they are not subject to customs duty. This does not extend to GST which applies:

• on all imports of goods into Jersey by business importers
• on all imports of goods sold by overseas traders who are not registered for GST, by private individuals above the de minimis threshold which is currently £135 and will be £60 from 1 January 2023

Also, from 1 July 2023, GST will not be charged on the importation of goods from overseas GST registered suppliers. Instead, those suppliers will charge Jersey GST at the point of sale irrespective of the sales value.

The value of the goods for GST purposes is the sale price of the goods, plus insurance and freight, where they originate in the UK.

Valuation rules for non-UK retailers

Different valuation rules apply to the sale of goods into Jersey from outside the British Isles Customs Union (which encompasses the UK, Isle of Man and the Channel Islands). Goods from such places are subject to customs duty if applicable, (many goods have a 0% duty rate) as well as GST.

For imports by private individuals from a place other than the UK, or for a sale by an overseas (non-UK) GST-registered seller, the value of the goods for GST purposes is the sale price of the goods plus customs duty plus insurance and freight costs. Customs duty will not apply if the value of the importation is below £135. For imports valued in excess of £135, a customs declaration will be required (as customs duty may be applicable to the goods in question) even if the GST has been paid to the online retailer who supplied the goods.

Example to show how the GST is calculated from a non-UK retailer

A Jersey consumer is buying an item from a GST registered vendor in the USA. The goods cost $1,200. The rate of duty applicable is 6% and the cost of carriage is $80.

GST is calculated as follows:

Step 1: Convert currency to £

Assume $/£ rate of exchange is $1.34 = £1.
Goods cost $1,200 = £895.52. Carriage costs $80 = £59.70.

Step 2: calculate duty

Goods (£895.52) + carriage (£59.70) = £955.22

Duty = £955.22 x 6% = £57.31

Step 3: calculate GST

Sale price (£895.52) + carriage (£59.70) + duty (£57.31) = £1,012.35

GST to pay will be £1,012.53 x 5% = £50.62.

Dealing with returned goods

From time to time, a consumer will buy goods from an overseas GST registered vendor and, for whatever reason, be dissatisfied with their purchase. Generally, such consumers will seek to return the goods to the supplier and obtain a refund, replacement or credit.

Where the supplier of the goods is an overseas GST registered trader, it will have charged the consumer Jersey GST when the goods were sold and it will have accounted for the tax to Revenue Jersey in the normal way. Where a customer returns goods to the supplier and is getting a refund or credit, the supplier will include the GST amount in the refund or credit and it will take a deduction for that amount in its GST return for the accounting period in question.

Consumers who buy goods from overseas GST registered suppliers, when they return the goods to those suppliers, do not have to apply to Customs for a refund of the GST. It will be dealt with by the supplier. Consumers returning goods to overseas sellers who are not registered for GST in Jersey will need to seek a refund from Customs, in the normal way, of GST paid on the original importation of the goods, if applicable.

Invoices

Overseas suppliers who are registered for GST in Jersey may wish to issue GST invoices to their customers in accordance with the simplified invoice provisions.  

Supplies to business customers must be evidenced by the issue of a GST invoice. If the supplier is based in a non-Sterling jurisdiction, invoices in relation to a supply coming within the scope of Jersey GST must display Sterling equivalent amounts.

VAT in country of despatch

Sellers of goods into Jersey from overseas are exporting goods from their jurisdiction to Jersey. Ordinarily, such sales will be zero-rated (sometimes referred to as exempt with credit) in their respective countries. Sales to private individuals in Jersey should not be subject to VAT or GST in the supplier’s country at any rate other than 0%.

Where the seller is registered for GST in Jersey, then he will apply GST at 5% to the sale.  If the seller is not GST-registered, then the supply is still subject to 0% VAT in the country of despatch, but GST at 5% on the value of the goods will be payable by the customer at the point of importation into Jersey.