On 1 July 2021, the European Union (EU) made the following important customs changes that affect businesses sending goods to EU countries.

  1. Changes to Value-added tax (VAT) threshold: VAT will be charged for all transactions involving goods and services, removing the €22 VAT-free threshold.
  2. Introduction of Import One-Stop Shop (IOSS): a central electronic portal businesses can use to pay their VAT on the sale of imported goods into the EU.

The EU also launched a new pre-arrival security and safety program on 15 March 2021.

Changes to VAT threshold

On 1 July 2021, the EU removed the low-value VAT threshold for eCommerce items. This means all EU-bound eCommerce items will be subject to VAT from 1 July 2021. All items from €0-150 will have VAT, formal clearance and customs clearance fees applied. There is no change for items above the €150 threshold – international customers must still pay VAT and customs duties upon import to the EU.

Current situation

Parcel value Payable
Parcels €22 or less

Payable

  • No VAT
  • No customs clearance fee
Parcels over €22 and less than or equal to €150

Payable

  • VAT
  • Formal clearance
  • Customs clearance fee
Parcels over €150

Payable

  • VAT
  • Formal clearance
  • Customs clearance fee
  • Duties

From 1 July 2021

Parcel value Payable
Parcels €150 or less

Payable

NEW:

  • VAT
  • Formal clearance
  • Customs clearance fee

 

Parcels over €150

Payable

  • VAT
  • Formal clearance
  • Customs clearance fee
  • Duties

€150 threshold

Above the €150 threshold, international customers must still pay VAT and customs duties upon importation to the EU.

Import One Stop Shop (IOSS)

To ensure a smooth transition to the new VAT system, the EU has created a central electronic portal to help businesses pay their VAT online. The IOSS simplifies VAT requirements for sellers of goods (including marketplaces) to buyers throughout the EU. It is for use by non-EU businesses selling low-value goods (up to €150 in value) to EU customers.

The IOSS allows you to declare and pay VAT on all sales of goods in a single electronic quarterly VAT return. You can offer your customers a transparent and simpler shopping experience by:

  • enabling your customers to pay the full cost of their goods when they check out from the eCommerce shopping cart
  • avoiding handling or processing fees that may be charged when VAT is collected at the border (often by the destination postal agency)
  • reducing the likelihood that their goods would be delayed by customs authorities.

You can begin using the IOSS for goods sold on or after 1 July 2021. IOSS registrations opened on 1 April 2021.

Current situation

Example of delivery charges below.
 

Charges Current payable Payable from 1 July 2021 - With IOSS Payable from 1 July 2021 - Without IOSS
Product value (including shipping)

Current payable

€10

Payable from 1 July 2021 - With IOSS

€10

Payable from 1 July 2021 - Without IOSS

€10

VAT (21% in Netherlands)

Current payable

€0 (exemption)

Payable from 1 July 2021 - With IOSS

€2.10

Payable from 1 July 2021 - Without IOSS

€2.10

Customs fee

Current payable

€0 (exemption)

Payable from 1 July 2021 - With IOSS

€0 (settled by seller)

Payable from 1 July 2021 - Without IOSS

€5-15

Total cost

Current payable

€10 

Payable from 1 July 2021 - With IOSS

€12.10

Payable from 1 July 2021 - Without IOSS

€17.10-27.10

Customs fees vary

Just like VAT rates, customs fees vary depending on the destination country.

Impact on delivery process

Choosing whether to use the IOSS will impact the delivery process. If you don’t register, extra administration is required when importing parcels; and your customer will need to pay customs fees on arrival of the goods in their country, rather than being able to pay it all at the time of initial purchase through you. The parcel may take longer to arrive, and the longer your customer takes to pay the required fees, the longer the end-to-end delivery will take.

With IOSS

1. Online sale (all costs included)

2. Processing and shipping of the order

3. Processing by customs officials

4. Processing by last mile carrier

5. Delivery to the door

Without IOSS

1. Online sale (all costs included)

2. Processing and shipping of the order

Delay

3. Costs (customs and taxes) paid by the customer

Delay

4. Processing by customs officials

5. Processing by last mile carrier

6. Delivery to the door

Preparing your business for the EU VAT e-Commerce changes

It’s important to understand how these changes will impact your business. Please carefully read through the VAT rules available on the European Commission website.

If your business has chosen to collect and pay VAT online, you can for register for the Import One Stop Shop (IOSS) in any of the EU member states. A list of contacts is available on the EU website.

Importantly, before you register your business in the IOSS, you’ll need to assign an intermediary tax representative to deal with EU VAT compliance on your behalf

Please note: Use of the IOSS is not mandatory. We recommend you read through the below FAQs to understand how the EU Tax changes work, and how they may impact you and your EU-based customers.

Pre-arrival security and safety program

On 15 March 2021, the EU launched a new pre-arrival security and safety program, supported by an advance cargo information system called (ICS)2. (ICS)2 will collect data on all goods before they arrive in the EU.

What you need to do

Make sure that your customs declaration includes a detailed description of the goods and what they are made from. Your item may be delayed if insufficient information is supplied.

For eCommerce items, please make sure you provide the correct HS tariff code. Please visit the European Commission website for more information about (ICS)2.

Frequently asked questions