There will be new regulations for the import of goods from third countries as of 1.7.2021.
Import VAT exemption
The previously applicable general tax exemption for imports of goods from third countries whose value does not exceed EUR 22 will be abolished, as this has led to major distortions of competition in practice. An incentive has now been created to process imports via the IOSS. If an entrepreneur decides to pay VAT via the IOSS in the future, the import of the goods (value < EUR 150) is exempt from import VAT. If the value of the goods exceeds EUR 150 or the entrepreneur does not use the IOSS, the import is taxable.
Mail order import
Mail order importation occurs when goods are transported or dispatched from a third country to a private individual in a Member State by the supplier. The transport or dispatch must be carried out by the supplier himself or on his account. For this purpose, the supplier must be at least indirectly involved in the transport or dispatch.
For such mail-order import transactions, there is now a special place-of-supply rule, according to which the place of supply is the place where the movement of goods ends. Therefore, taxation occurs in the country of destination if
- the goods are imported in a Member State other than the one in which the transport or dispatch ends, OR
- the trader declares the transactions through the Import-One-Stop-Shop (IOSS).
Entrepreneurs are required to issue invoices for such mail order import transactions. The relief for small value invoices is not applicable.
In the event that the IOSS is not used, there is another mechanism for mail order import transactions where import VAT is declared by the universal service provider, such as the Post Office, under certain circumstances. This only applies to goods up to EUR 150 in value. For this process the standard tax rate applies to all goods. For taxation at the reduced rate, a standard customs declaration must be submitted.
The following options will therefore be available for the taxation of import E-Commerce from 2021:
If you have questions regarding the corrent VAT changes, please contact our tax experts!