From 1 July 2021, there will be significant changes to the EU’s application of VAT rules which will apply to the shipment of goods into the EU. These reforms were initially earmarked to take effect from the 1st of January 2021. However, due to the Covid 19 pandemic the changes will now only come into effect from the 1st of July 2021.
These changes are targeted at B2C e-commerce imports which will impact both businesses and online shoppers.
EU and non-EU sellers selling goods online to EU consumers or businesses could import goods up to the value of €22 VAT free. This allowed importers to potentially circumnavigate the system by undervaluing the goods.
The change on the 1st of July will end this so all goods imported into the EU will be taxable at the member state’s VAT rate. These goods will now also require formal customs clearance, although most goods valued up to €150 remain exempt from customs duties.
The European Commission is aiming to simplify VAT obligations for companies carrying out cross-border sales of goods or services (mainly online) to final (EU) consumers and to ensure that VAT on such goods are paid correctly to the Member State in which the supply takes place, in line with the principle of taxation in the Member State of destination.
You will need to prepare now for these changes or ensure your freight forwarder is able to support the change on your behalf.
For more information on the changes click here.