VAT to pay from the 1st euro
To combat tax fraud, facilitate online sales between EU Member states and strengthen fairness between European and non-European sellers, VAT rules in cross-border e-commerce change on 1 July 2021.
VAT will be due from the 1st euro for any online purchase outside the European Union (EU), the exemption for purchases of less than €22 being removed. For marketplaces or dropshipping sites, this new rule is accompanied by a reform on the payment of VAT: they will be considered as having bought and sold the products themselves and obliged to pay VAT on importation. Is this the end of orders blocked in customs? Will there be better price transparency for purchases in non-EU countries? Explanations from the European Consumer Centre France.
VAT from the 1st euro for purchases outside the EU
Any purchase in a third country, such as the United Kingdom, delivered or imported into EU country is in principle taxed: VAT on imports and possible customs duties. These costs are usually claimed on delivery by the carrier who invoices you for an administrative fee for the completion of these customs formalities.
From 1 July 2021, the VAT rules change. The exemption granted so far for non-EU purchases of less than €22 will be removed. If until June 30, you can order separately from an online seller established outside the EU, via a marketplace for example, several low-priced items to avoid import VAT, from July 1st, you will pay VAT from the 1st euro.
Exception for purchases under €150 with seller registration
Import VAT and any customs duties will not be due if:
- Your package has a value of less than or equal to 150 € (price excluding VAT, without transport and insurance costs if they are invoiced separately);
- your seller based in a third country is registered in the new VAT payment system called “IOSS” (Import One-Stop-Shop). This system takes into account the new VAT payment rules which provide that from 1 July, beyond EUR 10 000 of sales in an EU country, the seller must pay VAT in that country.
If you order for less than 150 € from a seller registered in “IOSS”, you will pay online a price including VAT without normally risking the blocking in customs of your order when it is delivered to EU country. Problem: difficult or impossible for the consumer to know if the seller is registered on the IOSS platform!
For parcels with a value of more than 150 €, check in the general terms and conditions of the webseller if customs duties and VAT are included in the sale price or will have to be paid upon receipt of the package.
More transparency for marketplace purchases
From July 1st, marketplaces, these online sales platforms which connect seller and buyer, will be considered as having bought and sold the products themselves.
- if you order from a European seller on a marketplace, for less than € 150 of products from a third country, VAT will be part of the price to be paid and the marketplace will have to collect, declare and remit VAT instead of the sellers.
- The same applies if you buy on a marketplace from a seller outside the EU, regardless of the amount.
You should therefore no longer have to suffer from a blockage of your order in customs with additional fees to be paid to receive it.