We kindly inform you that the new amendments to the value-added tax (VAT) rules in the European Union (EU) will enter into force on 1 July 2021. This will have an impact on the e-commerce business. We would like to ensure that your dispatch processes continue to run smoothly, so, if you sell goods from third countries to EU consumers online, we recommend preparing your business for these changes in advance!
What is changing from 1 July?
- VAT exemption on import from third countries into the EU will be removed – as of 1 July 2021, the import tax, VAT, will be charged on all consignments sent to natural persons, valued from €0.01 to €150.
- Online shops that sell goods under €150 may declare and pay VAT collected at the time of the sale on the new IOSS (Import One-Stop-Shop) platform*. To do this, you will only need to register once.
*The previously valid methods of declaring VAT will remain available – you may do it yourself using the platform created by the Customs of the Republic of Lithuania or leave it to the carrier representing your company to manage it.
Attention! During the transition, levying customs duty on the consignments which take a long time to travel will depend on the time the consignment documents are presented to Customs – if the documents are presented after 1 July, the consignment will be subject to the new customs arrangements.
Why is it important?
This change will directly affect natural persons who receive consignments from popular e-commerce platforms such as ebay.com or aliexpress.com, where the value of a purchase order often does not exceed €22.
What is the purpose behind these changes?
Ensuring equal trading conditions for EU undertakings
Goods imported into the EU with a value of under €22 are currently untaxed for third country vendors. Therefore, EU undertakings which transport goods inside the continent suffer from unfair competition.
Facilitating cross-border e-commerce
Changes should simplify the tax payment process for e-commerce businesses by eliminating the need to register VAT in several countries. Everything will be transferred to a single IOSS platform.
Preventing fraud in e-commerce tax
Based on the latest data, on average, the EU loses €50bn a year due to cross-border VAT fraud. This reform is intended to facilitate VAT tracking and ensure businesses meet their obligations and collect more tax revenues into the EU budget.
Do you have questions about the upcoming changes? Contact us