Hello world Export Important changes relating to customs

Hello world. Export. Important changes relating to customs and VAT. Issued: Updated 9 th October 2020

UK and international law changes affect how mail and parcels will be cleared in the future and will be subject to further changes. New laws driven by aviation security and fiscal requirements will be getting much stricter from 2021. We are experiencing the biggest changes to the international trading landscape in decades Mail and parcels need to be electronically cleared and customs data needs to be submitted electronically in advance of the mail or parcels movement. This is not unique to Royal Mail, this is a legal and regulatory requirement and something other carriers already do.

What events are driving these changes? 1 st From the January 2021 onwards the way we import and export across the globe and will continue to change. This is being driven by multiple external factors against a backdrop of the global pandemic COVID 19. Customs Data VAT and Pricing US Stop Act. Data required on all shipments entering the Universal Postal US. Union Customs Data transfer mandatory BREXIT 31 st Dec 2020 transition period ends. UK will be outside EU’s customs union. Import Control System 2. Predeparture data for items sent to EU for aviation security. Modernising VAT. EU legislation shifting the tax liability to the sender. Universal Postal Union Changes to the remuneration structures. Covid 19 Personal Data & Privacy E-privacy. Defining the need to “opt in” or “out” and its impact on DM. GDPR. EU General Data Protection Regulations legislation.

2018 -2021 Jan 2018: Apply S 10 barcodes required on all items of non personal correspondence (UPU) Jan 2020 Mandatory to provide electronic customs data March 2021 ICS 2 EU customs pre-arrival data Key changes to International shipping (Import & Export) Apr 2019 Nesting UPU (US STOP Act) Jan 2021 Brexit end of transition period. EU requires CN 22 or CN 23 and electronic customs data *Dates defined by the EU authorities July 2021 Delayed removal of LVCR* to € 0 for items sent to EU. VAT IOSS* scheme goes live for companies sending items into the EU

Exporters from UK - what you need to know - Customs From 1 st January 2021: • All items/goods (except personal correspondence) sent from the UK to the EU or the rest of the world require a CN 22 or CN 23 customs declaration applied to the outside of each package • Compliant electronic customs data must also be supplied via an approved shipping platform • There must be an S 10 barcode applied* • It is the sender’s responsibility to ensure they are customs compliant. Failure to do may result in items being delayed, returned or further charges being applied by the designated operator in the delivery country. • Companies that are trading between the UK and the EU will need to register for an EORI number. Follow the Governments checklist for exporting *Max Sort users will be advised on acceptable nesting methods to meet UPU requirements

Exporters from the UK to the EU - what you need to know – VAT & Thresholds From 1 st January 2021: • Low Value Consignment Relief (LVCR) for items/goods (excluding personal correspondence) below € 22 will remain in place until 1 st July 2021* for items sent into the EU† st Items/Goods (excluding personal VAT Handlin • From 1 July 2021, exporters sending items/goods (excluding personal correspondence) g Fee correspondence) Under € 22 • under € 150, to the EU, paying VAT (where Over € 22 and under € 150 applicable) on behalf of the buyer can register for the Import One Stop Shop Over € 150 or excise goods of any Scheme (IOSS) to pay VAT as if they are value Gifts sent from a VAT Handling within the EU. • Import VAT, customs duties and any customs consumer Fee clearance fee will be collected by the receiving designated operator using the Delivery Duties Under € 45†† Unpaid (DDU) process prior to delivery. Over € 45†† † Except Sweden and Denmark who have already removed or lowered LVCR * Subject to possible further extension †† Some EU countries vary their thresholds from the standard please refer to the relevant in country authority

New Services and products to manage customs and VAT Import Delivery Duties Paid (DDP) service for items over £ 135 / € 150 sent to the UK Improving customer experience with our new postal Delivery Duties Paid service. All taxes and duties paid at point of purchase. Export EU Delivery Duties Paid (DDP) Coming Soon We are currently developing a solution to enable you to pay taxes and duties on behalf of the consumer to avoid paying at point of receipt/delivery, smoothing the customer experience. We are currently working through the legislative requirements to finalise this solution. EU Import One Stop Shop (IOSS) Registration & VAT Return System Coming Soon in the new year. Customers sending to the EU will be able to register for the new IOSS scheme and pay necessary VAT direct to one (or more) EU member states for clearance in all EU destinations HS (Harmonised System) Classification Code checker For customers with a large number of products/SKUs. Simply provide a CSV of all your stock items and we will append the correct HS codes. e. Commerce Tools Coming Soon. A suite of API tools. • Landed Cost Visibility/Calculator • Prohibited & Restricted Goods Check • Denied Parties Check • HS Classification Code Designed to improve your International deliveries

Official sources of guidance and information • • • Royal Mail - Brexit Royal Mail Electronic Customs data Royal Mail customs forms help UK Government’s website UK Border operating model Changes to UK VAT for the treatment of imported items • UK VAT Registration • Details of the UK import and export processes ICS 2 • https: //www. royalmail. com/brexit https: //www. royalmail. com/electronic-customs-data https: //personal. help. royalmail. com/app/answers/detail/a_id/106 https: //www. gov. uk/transition https: //www. gov. uk/government/publications/the-border-operating-model https: //www. gov. uk/government/publications/changes-to-vat-treatment-of-overseas-goods-sold-to -customers-from-1 -january-2021/changes-to-vat-treatment-of-overseas-goods-sold-to-customersfrom-1 -january-2021 https: //www. gov. uk/prepare-to-import-to-great-britain-from-january-2021 https: //www. gov. uk/prepare-to-export-from-great-britain-from-january-2021 https: //ec. europa. eu/taxation_customs/news/are-you-readyics 2_en? _sm_au_=i. VV 4 DRFHTsf. Pj. V 0 r. W 3 BLHK 30 Lk. Jj 0

Customs Compliant Parcel shipping solutions Click & Drop®: easy to use, ideal for retailers sending 20+ parcels per week. Scale up despatch to multiple workstations, integrates seamlessly with marketplaces Store. Feeder: good for retailers trading globally over multiple channels, a rich e-commerce software solution that’s innovative and scalable Pro Shipping: scale up despatch, add workstations across multiple locations, automate label printing, electronic customs creation and end of day reports Third Party: we partner with a wide range of providers to fully integrate our parcel services for customers using third party integrators Customer Own Shipping System (COSS): we can provide an integration service for larger customers requiring a bespoke service. A Place in Space Comics and collectibles e. Bay seller The benefit of working with Royal Mail is Click & Drop®. It’s all automated. And with international electronic forms, it’s doing it all for us. Dom Rand, IT Manager, A Place in Space

How can we help you Our customer experience Customs compliant shipping systems to suit your business needs: • Click & Drop® • Pro Shipping • 3 rd Party integrated shipping tools Account Management: to help navigate the journey Customs Compliance Reporting: access to customer compliance data to keep you on track. Online Resources: Royal. Mail. com with helpful advice and guidance to ensure you can continue to ship overseas

Delivering to the EU is the same as the rest of the world. Paying Import VAT and duties, the delivery experience. DDU Postal Item bought at point of purchase no VAT or customs paid for or applied Item bought at DDP Postal & point of purchase VAT & customs Commercial charges paid Freight Collection from customer with CN 22 or CN 23 customs form (and electronic customs data) Items shipped through RM network via HWDC and onwards to country Item received by in country delivering postal company and presented to customs Item cleared by commercial clearance agent and then presented to delivery company (post or other) Customer contacted and advised of any VAT and customs charges due prior to delivery and a handling fee applied Item delivered to customer DDU – Delivery Duty Unpaid DDP – Delivery Duty Paid

Importers to the UK – what you need to know - Customs From 1 st January 2021: • All items/goods (except personal correspondence) sent from within the EU or the rest of the world to the UK require a CN 22 or CN 23 customs declaration applied to the outside of each package • Compliant electronic customs data must also be supplied via an approved shipping platform • There must be an S 10 barcode attached to the outer and items must be nested within a bag/container and an S 9 barcode attached to the bag/container • It is the sender’s responsibility to ensure they are customs compliant. Failure to do so may result in items being delayed, returned or further charges being applied.

Importers to the UK – what you need to know – VAT & Thresholds From 1 st January 2021: • Items/goods (excluding personal correspondence) valued between £ 0 and £ 135 must have the VAT paid directly to the UK authorities, as if the seller is located in the UK themselves. Ensure you follow the government guidance and register for VAT • Items/goods (excluding personal correspondence) over £ 135 or excise goods of any value, attract VAT & duties and these can be charged at the border and would also attract a customs clearance fee (as now) • Import VAT, customs duties and any customs Gifts sent from a VAT Handling clearance fee will be collected by the receiving consumer Fee designated operator using the Delivery Duties Under £ 39 Unpaid (DDU) process prior to delivery. Over £ 39 • Mail sent to Northern Ireland is an issue currently being reviewed by the UK Government. Customers should plan to continue sending items as they would to the UK today, until further notice.