How will the EU’s new VAT rules affect me? All orders shipped to the European Union are now subject to VAT. Until July 1st, 2021, when buyers in the EU purchase goods shipped from a country outside of that region with a total value below €22, they are exempt from paying VAT. As of July 1st, 2021, buyers will be required to pay VAT on all purchases up to €150. Import VAT and duties will continue to apply on orders above this threshold. Merchants shipping goods to EU buyers from outside of the EU can choose to collect VAT on orders below €150 to simplify the buying and shipping experience for their customers. If merchants choose not to collect VAT on exports to the EU below €150, customers will be charged upon delivery of the goods by the carrier.
This removal of the €22 value, or de minimus value is to keep EU competitive in a growing and expanding eCommerce market. The EU is taking the incredible eCommerce growth in the past few years and using the data to modernize it’s VAT policies to better help their companies. This new rule protects EU companies and helps them avoid unfair competition and distortion.
However, the de minimus customs value will not change and will stay at €150.
How are eCommerce platforms adapting?
Many eCommerce platforms (such as Shopify) are already updating their systems ahead of this new change. Shopify specifically has decided to help calculate VAT for inter-EU purchases. They are giving sellers the option of adding VAT to goods exported into the EU for greater simplicity for buyers. Several eCommerce platforms are also following suit.
The EU is trying to make it easy
The EU has also created options for sellers to take care of VAT before the packages reach their customers. For e-commerce consignments of €150 or below, the EU is introducing an optional Import One-Stop Shop (IOSS) to clear goods through customs. This will allow sellers or online marketplaces to charge VAT at the point of sale and pay authorities directly. This can make the process simpler and more transparent for the consumer, and helps to ensure efficient customs procedures.
If this IOSS system or other means of collecting VAT through eCommerce platforms are not used, the carrier will collect the VAT from the customer prior to delivery.
How will the EU’s new VAT rules affect me? Even if I do not ship to Europe? Even if you do not send products to Europe, most countries have similar requirements for tax and customs. Customs authorities are increasing their focus globally on enforcing compliance. Therefore, always be sure to send accurate customs information regardless of your shipment’s destination or origin. Getting into the habit will significantly reduce customs delays.
For more information on how the EU’s VAT changes will affect you, click here.
If you have any concerns about the EU’s new VAT changes will affect you please contact eGlobalusa. We would be glad to help you navigate any issues with international eCommerce shipping.
Director of Marketing & Media
Kristin loves coffee and reading, in that order! She drinks the coffee and makes the things for eGlobalUSA.