Taxation and Customs Union

Customs formalities for low value consignments

New VAT and customs e-commerce rules for the import of low value consignments as of 1 July 2021

VAT e-commerce rules

From 1 July 2021, the EU will introduce new VAT e-commerce rules to ensure fair competition for EU businesses and reduce the VAT losses resulting from the importation of low value consignments (i.e. goods with a value not exceeding EUR 22) from third countries.

The new VAT e-commerce rules aim to increase the compliance of e-commerce stakeholders by simplifying the collection of import VAT when consumers buy goods online. They introduce new obligations for marketplaces and platforms facilitating the online supply of goods regarding distance sales of goods imported from third countries or third territories in consignments of an intrinsic value not exceeding EUR 150.  

E-commerce suppliers and marketplaces/platforms, where applicable, may use a simplified system to declare and pay VAT  for distance sales of goods imported from third countries in consignments not exceeding EUR 150 (IOSS).

More details on the new VAT e-commerce rules on the supply of cross-border services and distance sales of goods are available here.

Customs implications

The new VAT rules introduce two new changes that are particularly relevant for customs:

  1. They abolish the VAT exemption for imported goods below EUR 22 as of 1 July 2021; and
  2. They provide two new methods to collect the VAT on goods in consignments of a value not exceeding EUR 150. These include the Import One Stop Shop (IOSS) and the special arrangements. In order to ensure that VAT is collected at import, from 1 July 2021, an import declaration will be required for all goods entering the EU, regardless of their value.

The customs legislation (UCC Delegated and Implementing Regulation) was modified in 2019 and 2020 to adapt to the new rules:

  • A new form of customs declaration was introduced for release for free circulation of goods in consignments not exceeding EUR 150 (super-reduced dataset).
  • This customs declaration will only require a minimum number of data elements (about one third of a standard customs declaration with a full dataset). It will only apply to low value duty-free goods and private-to-private consignments up-to EUR 45 that are not subject to prohibitions or restrictions.
  • The smaller number of data elements will also facilitate and speed up the process of dealing with a high volume of parcels.
  • This customs declaration is available to any person (consumers, business, postal or express operators).
  • Both customs administrations and economic operators (particularly postal operators and couriers) have to adapt their IT systems to allow for the declaration of low value consignments.

To facilitate the interpretation and ensure a harmonised implementation of the rules applicable from 1 July 2021, the European Commission, in close collaboration with Member States’ customs authorities and relevant e-commerce stakeholders has prepared a Guidance document on the Importation and Exportation of Low Value Consignments . The Guidance complements with relevant explanations and practical examples on the customs rules, formalities and processes the Explanatory Notes on the VAT E-commerce rules.

Until 1 July 2021, postal consignments not exceeding a value of EUR 150 can be declared for free circulation without a formal customs declaration. The same facility applies to non-postal consignments with a value not exceeding EUR 22.

E-commerce returns

The UCC provides for specific rules to facilitate the return of low value goods. Goods in postal consignments with values of up-to EUR 1,000 that are not liable for export duty are deemed to be declared for export by their exit from the customs territory of the EU, in accordance with Article 141(4) of the UCC-DA. Similarly, goods in express consignments with values of up-to EUR 1,000 that are not liable for export duty are deemed to be declared for export by their presentation at the customs office of exit, in accordance with Article 141(4a) of the UCC-DA.