New Arrangements for EU Value-added Tax (VAT) and Import One-Stop Shop (IOSS) (Effective from 1 July 2021) – Revised version

2021.12.09

Posting of Commercial Goods

According to the European Union (EU), for sending (including through postal channel) commercial goods (including merchandise sold online) to the business users (B2B) or consumers (B2C) in the EU, value-added tax (VAT) will be levied, irrespective of what the value is, from 1 July 2021 onwards. Major changes include:

  1. The existing VAT exemption for the importation of goods to EU countries with a value not exceeding €22 is removed.
  2. The sellers (senders) instead of the buyers (addressees) will be responsible for VAT payment.

EU launched the Import One-Stop Shop (IOSS) to facilitate the declaration and payment of VAT by sellers for imported goods valued at less than EUR 150 to buyers within the EU. If the seller can provide their registered IOSS VAT identification number when mailing the goods, the buyer does not need to pay VAT upon customs clearance.

If a seller has not registered with the IOSS, the buyer has to pay the VAT at the time of import for customs clearance before they could receive the goods according to the current procedures. Furthermore, additional surcharges incurred may be charged to the buyer. The delivery may also be subject to delay.

For further information, please refer to website of the European Union https://ec.europa.eu/taxation_customs/business/vat/ioss_en.

Postings of Personal Items*

The new arrangement has no impact on posting personal items. Items with declared value of less than €45 posted by private senders to private addressees are VAT free. IOSS is not applicable to these items. However, if the declared value exceeds €45, the VAT must be paid by the addressee according to the current practice. In addition, the addressee may have to pay other import taxes or relevant fees as required by the customs authorities of certain EU destinations, and comply with other import requirements.

*The decision rests with the local customs authority on whether the mail item is for personal or commercial use.

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