As of 1st July, the European Union will be updating its VAT rules.
These updates will impact the shipments between EU countries and those made to EU.
What will change?
- The European Union’s exemption for goods valued up to €22 will no longer apply. This means that the small consignments from a non-EU country will be subjected to import VAT in the EU as of 1st July.
- Businesses will be able to charge VAT at the point of sale by using the EU’s new Import One-Stop Shop (IOSS) when importing goods valued under €150. The IOSS is designed to create a smoother process so that your customers can avoid unexpected customs and carrier admin fees but still, it can be alternatively collected from the receiver.
- Liability for VAT collecting and reporting for business to consumer transactions in the EU countries will fall on the online marketplace and not the sellers who use the platform – if the value of the consignment is under €150.
- Up until now, EU businesses had to register VAT in EU countries they made business with and charge their customers domestic VAT rates once the sales reached a specific threshold. As of 1st July, this threshold will be no longer in use and VAT rate must be charged from the very first sale. However, businesses can choose to file all their sales through a single IOSS VAT return by closing their VAT registrations in different EU countries. In this case, VAT would be paid to the home authority then forwarded to your buyers’ relevant EU countries – the VAT rates of these countries will still apply.
These import VAT changes will mainly affect the e-commerce websites such as Etsy or Shopify.
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