Most non-European brands and retailers have no idea or just a little knowledge, on how the European VAT system works. Selling and shipping cross border direct B-C into Europe holds a big draw. As you might have guessed, it’s more complicated than just selling DDU (Delivered Duty Unpaid) via an integrator or mail service provider.
In last customs insight article of the ‘Customs administration of the Netherlands’ the interference of Brussels was highlighted and a number of fiscal aspects relating to international e-commerce have received the EU’s heated attention again. The current European VAT exemptions and the current system of VAT payment for cross-border trade were addressed again as the hot potatoes with the so-called VAT e-commerce package from January 1st in 2021.
How will your direct B-C online selling business into Europe change?
Unfair competition
No European VAT is levied on goods sold under the exemption limit via the internet from outside the EU. However, VAT is payable on the same goods sold in the European domestic market as well. The VAT exemption for online bought items outside the EU under the 22 Euros threshold will be abolished from 1 January 2021. From that date, identical/similar goods from inside and outside the EU will be taxed equally to create a level playing field.
Fiscal liability
This decision will have big consequences for your European business and for customs administrations throughout the entire EU. European VAT will have to be paid over an enormous quantity of goods that were previously unaffected – very often abused – and they will all have to be digitally declared in real time as a single shipment.
Port of entry
European VAT is now often paid over goods from outside the EU at the wrong port of entry and not where the goods are actually consumed. It is not unusual for VAT to be paid in the member state where the e-commerce shipments enter the EU, but in general these destination countries – where the products are ultimately consumed – don’t see any of the money levied.
All Inclusive checkout
Although, the so-called IOSS is not in place yet you are already able to add an all-inclusive solution in your checkout, so you are head of the curve. As a non-European retailer selling and shipping into the EU you are able to minimize risk for you and your European customers and reduce cost via a direct bulk infeed. This way your European customers don’t face the surprise at the door having to pay additional import duties and taxes and high clearance cost.
EU and European customs
As you can imagine a lot of work needs to be done by the EU and European customs before the new system is operational. At GO EU Commerce we already have an efficiently running and secure platform directly connected to tax authorities and customs administrations. Make sure you have all data available for a single item and real time clearance, so you stay in business. No clearances or a bulk clearance using/abusing the VAT exemptions via postal operators are history. Postal operators will then declare shipments in the ‘normal’ way submitting declaration digitally instead of ‘any other act’.
TOP 5 things to take into consideration as you craft your next move:
- European e-commerce rules and legislations
- Shipping solutions into Europe
- Real time Duties, Taxes and Fees
- Scalable Solution
- Localization and registration
Contact us via our website or send an email to sales@goeucommerce.com and we are more than happy to schedule a call how we can help you doing more business in Europe. Be compliant, reduce cost and risk and how to stay head of the curve.
