Isn’t this what happened in 2007-2008. Housing costs just so unaffordable, other consumer spend had to suffer. With incomes quite fixed something had to give.
Still if there is no supply prices must rise we are told now. We were told prices couldn’t fall away in 07/08. There are always excuses along the line, until suddenly there just can’t be. Until tipping point were average joe just can’t absorb the costs anymore. Maybe we really are a couple of years from that. Maybe not.
Having just recently bought something as mundane as light bulbs online, being cheaper to buy in the UK and ship to Ireland than to go to the local DIY, I was interested to see DMcW’s article in the IT:
I agree, that’s why I skipped over his Guinness Index. But there’s no getting away from the fact that cheap Sterling plus the lower overheads of online retailers gives Irish shoppers a unique opportunity. We’re lucky that there’s an amazon.co.uk in a language we understand (whereas there’s never going to be an amazon.ie), and that “free shipping to the UK” generally includes Northern Ireland which means the huge UK retail market is only a Parcel Motel away.
Was wondering for some time if parcel motel and the likes are currently already operating in some type of customs grey area, and just being ignored by Revenue for the moment to avoid “Bad publicity”.
Essentially, using parcel motel means the Irish tax man doesn’t get its VAT that it would be due as the final receiver of the product is in the Republic.
It is going to be very interesting (or at a minimum somewhat noteworthy) indeed if those services will survive post Brexit, unless customs union is being retained.
AFAIK this isn’t a grey area.You’ve paid VAT in another EU jurisdiction so that’s OK. Same as driving to the North and bringing it back - or driving over to France to get cheap wine - the duty and VAT has been paid in another EU country. I only use PM to get free UK delivery from Amazon or for stuff that they won’t deliver to an Irish address. Things will be different after Brexit though.
Within the EU VAT is chargeable in the country of delivery rather than country of origin.
The policy was introduced a few years back to stop the kind of sales tax arbitrage that sees Amazon locate in Washington state.
When you go to actually purchase something on amazon.co.uk the final price changes (somewhat opaquely) when you put in a delivery address in Ireland. This is to account for the higher VAT rate (23% v 20%).
I have no idea if the Parcel Motel model is legitimate. I presume they claim that they are simply providing a service of transporting a product from one EU member state to another. And that it is not for resale and VAT has already been paid. I know this service exists elsewhere in the EU too.
From a Revenue collection perspective, VAT is in any case levied at 23% on the service Parcel Motel is providing you, which presumably makes up for most of the 23%-20% VAT differential between Ireland and the UK on the product itself.
So if you get your stuff delivered to Dublin, Irish VAT rates apply and the VAT needs to be handed over to Irish Revenue. If you deliver to NI, UK VAT rates apply.
Irish Revenue loses a bit of VAT income from those ROI based customers who use parcel motel, as despite the final recipient being in ROI, the UK Gets the VAT. I have No idea how much.
I’m sure it is either rather complicated or grey enough area for the Irish Revenue not to crack down on this. You could argue along the lines of parcel motel being only an intermediary and not the final delivery point.
Don’t know myself if it is legitimate but given they have been operating a few years now it doesn’t seem to be obviously illegal.
The 23% vat on the parcel motel service costs is significantly less than the vat on the product I’d say, given it is around 4 Euro per delivery. I am quite sure that it is much less than the average value of goods.
AnPost provide a similar service - ‘Address Pal’. I imagine this is in order to claim some of this market?
I presume the state owned and run postal company isn’t doing something that Irish Revenue are against? Then again, maybe!
Thanks Skippy3 and newirishman. I never knew that. So for time being we benefit from 3% less VAT by shipping to an N.I. address. On items above a €100 or so that would pay for the Parcel Motel delivery.
If you are ramping your order value to max your VAT return , watch out for the insurance limit (€300?). One PM location was raided before Christmas. Extra insurance cover is available but will obviously eat into the VAT gain
Nah, the VAT is just icing on the cake. The thing that has left me gobsmacked is that even low-value order items are cheaper to ship from the UK than to buy in Woodies. It’s light bulbs this time around, in the past I’ve bought wall switches and a couple of metres of cable. It’s cheaper, there’s an incomparably greater selection, and I get to pick up at leisure from a nearby location. Why would I ever darken the door of a local shop again?! (Possible answer: 'cos Brexit’s gonna wreck everything).
Is it your first time noticing you live on treasure island?
I really feel for business owners in this country with all their increasing costs, but the consumer will generally choose ‘bargain for the buck’ option everytime.
The next generation buy every non-perishable online. Our parents bought everything locally, we buy them globally - how can a local retailer survive that onslaught?
Even with Brexit, it’ll intensify due to the ‘regulatory alignment’ stance adopted.
Plus there are extra online discounts available from cashback sites or the recent [*20% off EbayUK * (https://www.hotukdeals.com/deals/20-ebay-discount-12-to-6pm-today-only-2866107) that you won’t get here. 10% of Ireland went North to donate to HMRC coffers for Christmas shopping.