While e-commerce is growing in Europe, more and more consumers buy products from outside the European Union (EU) in their search for value for money. Until now, they could benefit from an exemption on Value Added Tax (VAT) on imported Low Value Consignments with a value up to 22 euro. As of 1 July 2021 this exemption will no longer exist and EU customers will have to pay VAT on all their purchases including their t-shirts, phone covers or reading glasses coming directly from China and other countries outside the EU. This change in regulation will involve, among others, marketplaces and parcel delivery companies. They will have to adapt their systems and processes in order to allow proper import procedures for these “small” purchases, manage customer expectations and provide the customer with a payment method for its VAT without changing the delivery process too much. 

Using GS1 standards may be beneficial to all parties involved. That is why GS1 is inviting marketplaces, online sellers and logistics service providers to join the discussion about how to use open identification and data standards in this context.  

What will happen 1 July 2021?

  • As of 1 July 2021, the EU will no longer have an exemption for Low Value Consignments in regards to paying VAT on imported goods.
  • Distant sellers, marketplaces or online sellers who sell goods from outside the EU directly to EU citizens are deemed to declare, collect and pay the VAT on these goods imported into the EU and keep the relevant records for a period of 10 years.

 

Importing goods will now require VAT declarations for all parcels coming into the EU, including low value ones. In order to facilitate VAT declarations, Customs Authorities will allow distant sellers (marketplaces and direct sellers) or delivery companies to make VAT-declarations on behalf of the consumers for Low Value Consignment (sales value up to 150 Euro under the new regulation) electronically using a “Super Reduced Data Set”. This data set will contain the most basic information to facilitate the collection of the VAT: e.g. data of the customer, where the consignment (and in most cases, the parcel) must be delivered, description of the item, value of the item and the data of the declarant. The distant seller will send the required data to the Import One Stop Shop (IOSS) registered with one Member State VAT Authority within the EU. The IOSS will submit the relevant declarations to this VAT Authority. This VAT Authority will share the data with the VAT Authority of other EU Member States to where the distant seller sends parcels. 

The marketplace or parcel-delivery company will pay the total of the declared VAT to the VAT Authority, through the IOSS, on a monthly basis. 

Would you like to know more about the impact of this new regulation on marketplaces, online sellers and Logistics Services Providers? Are you interested to join the work on open identification and data standards to comply with new EU VAT regulation?

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