This information is also of interest for freight forwarders, logistic service providers and customs agents.
The huge rise in e-commerce and distance sales of goods has seen the roles and responsibilities of postal operators and couriers change drastically, if nothing else due to the sheer volume of purchases consumers are now making online.
Due to the boom in online shopping, EU governments are losing out on an estimated EUR 7 billion in public revenue annually as currently low value goods are exempt from VAT on importation into the EU. Moreover, a similar exemption is not available for sales of low value goods within the EU. To address these different VAT regimes and to overcome the barriers to cross-border online sales, these rules have been modernised.
The new VAT e-commerce rules bring a simple and uniform set of VAT rules for all businesses engaged in cross-border e-commerce, either from inside or outside the EU. This harmonisation of rules create a level playing field for all businesses and will provide opportunities for intra-EU trade to increase significantly. Since trade within the EU is not subject to any procedures by postal operators or couriers, you will benefit greatly from this increase in distance sales within the EU.
In parallel, all commercial goods imported into the EU asre now subject to VAT irrespective of their value meaning no more exemption for imported goods with a value up to EUR 22. Online sellers and online marketplaces/platforms making distance sales of imported goods to customers in the EU of a value not exceeding EUR 150 can use the newly developed Import One Stop Shop (IOSS) to declare and pay VAT. In this situation, the responsibility for the collection of the VAT doesn't fall on the postal operators and couriers.
Online sellers and online marketplaces/platforms who use the IOSS need to provide you the information required for the customs clearance in the EU including the IOSS VAT identification number. Electronic marketplaces not involved in the dispatch or transport of the goods generally provide this information to the actual seller and agree on strict rules about the use of their IOSS VAT identification number, including communicating it to the carrier and/or the customs declarant.
This is necessary in order to avoid VAT being levied upon importation and to therefore speed up the release for free circulation of the goods. The end result should reduce strain at this critical stage of the supply chain. Postal operators and couriers don't have to and in fact cannot check the validity of this IOSS VAT number, but it is important to be aware of the change in procedures.
For the sellers or marketplaces/platforms that do not register in the IOSS, the competent authorities will collect VAT on importation of the low value goods just as VAT is collected on higher value goods at customs now. Customers in the EU will only receive the goods bought after the VAT has been paid.
Postal operators and couriers might also charge an additional clearance fee to the customer for collecting VAT and completing the necessary formalities upon importation of goods. This means that as EU customers are used to prices including VAT, the payment of additional fees at the time of importation might lead to the customer refusing the package in question.
Postal operators and couriers may use a simplification whereby the VAT from the customer is collected and paid to the competent authorities on a monthly basis. This simplification offers them a cash flow advantage to compensate for the additional packages that will need customs clearance leading to increased administrative work.
It is important to raise awareness of these changes with your business clients and encourage the uptake of the IOSS so operations can continue to run smoothly and everyone can benefit from the simplification of the system.
Spread the news and adapt to the new rules!
These new rules will offer:
- Greater ownership: As key players in the transport and distribution of goods you are in the frontline for declaring goods to customs;
- Faster process: The new rules, including the adoption of electronic data transmission, seek ultimately to simplify the procedures and ensure speedier customs clearance so you can deliver goods faster to your customers.