SHIPPING GUIDE

5 Key VAT changes for EU's €150 import threshold

1. Removal of the €150 import threshold

Starting in March 2028, the €150 import limit established in July 2021 will be abolished. This means that all goods, regardless of their value, will be subject to VAT and customs duties. E-commerce businesses will be required to collect these taxes at the point of sale during checkout.

The removal of this threshold eliminates the tax-free advantage previously enjoyed by items valued under €150. This change ensures that all imports are taxed uniformly, promoting fairness in the market. E-commerce businesses must update their checkout systems to accommodate these additional duties, ensuring compliance and transparency for consumers.

This change is not just a new rule; it is a basic shift in how online shopping works in the EU. The EU wants all imports to pay VAT and customs duties. This helps local businesses compete better with international sellers.

E-commerce businesses must invest in technology and training. This will help them meet the new requirements. This involves updating their online shopping sites to correctly calculate and show VAT and customs fees at checkout.

Not following the rules may lead to fines and loss of customer trust. It is important for businesses to take action quickly.

2. Marketplaces liable for customs and VAT

Starting in 2028, online marketplaces like Amazon and eBay will be required to collect customs duties and VAT for all items sent to the EU. They now collect VAT on items under €150. This new rule means they will also collect VAT on all imports, no matter how much they cost.

This change is designed to prevent consumers from facing unexpected charges or complicated paperwork upon package delivery. By managing VAT and customs duties in advance, marketplaces can improve the shopping experience. This approach makes it easier for customers to buy products. It also helps lower the chances of people leaving without completing their purchase because of unexpected costs.

Marketplaces must set up systems to calculate and show the right VAT and customs duties. These should be based on the product's value and where it comes from. This requires significant investment in technology and compliance measures to ensure that they meet EU regulations. Marketplaces must also ensure that the products they offer comply with EU regulations regarding safety, sustainability, and ethical standards. This shift places greater accountability on platforms, requiring them to uphold EU compliance for all sales.

The new rules could create more competition between marketplaces. Customers will probably choose the platforms that provide the clearest buying experience.

3. "Deemed Importer" concept introduced

A new idea called the "deemed importer" will start. This means that online marketplaces will officially import goods into the EU. This idea lets marketplaces handle customs and VAT collection right when a sale happens.

For businesses that sell products on marketplaces, they will not have to manage customs paperwork on their own. The marketplaces will take care of it for them. E-commerce businesses selling directly to consumers in the EU should ensure their marketplace partner will manage tax duties.

4. Extended parcel delivery options

Under the new e-commerce VAT package, special parcel delivery options will now be available for packages valued over €150. This extension allows businesses to use simplified VAT arrangements for higher-value goods, making cross-border sales easier.

The special delivery options include:

• Parcel insurance
• Priority or express delivery
• Gift wrapping or special packaging
• Delivery to alternative locations
• Notification services

These arrangements aim to streamline the shipping process and enhance the overall customer experience for higher-value items.

5. EU customs hub for e-commerce

The EU Customs Hub will become an essential tool for e-commerce businesses in the coming years. From 2028, businesses will have access to this hub for reporting customs and VAT collected through online platforms. The system will simplify the reporting process and help follow the new VAT rules.

The implementation timeline is as follows:

• 2028: E-commerce businesses gain access to the EU Customs Hub.
• 2032: All businesses will have voluntary access to the hub.
• 2038: The use of the hub will be mandatory for all businesses involved in cross-border transactions within the EU.

The EU Customs Hub is designed to make things easier for businesses. It will bring all customs and VAT reporting into one system. This change will reduce the workload for businesses and help them comply with EU tax laws more easily.

Key actions for e-commerce businesses

The upcoming VAT reforms set to take effect in March 2028 will significantly impact e-commerce businesses that sell to EU consumers.

With the removal of the €150 limit for imports, the new idea of a "deemed importer" is now in place. Marketplaces also have more responsibilities. Businesses need to get ready for these changes.

The centralized customs reporting system through the EU Customs Hub will make the process easier. However, businesses will need to update their systems and practices to remain compliant.

Key actions:

• Adjust checkout processes to collect VAT and customs duties for all goods.
• Understand that marketplaces will be responsible for customs and VAT collection.
• Stay informed about the EU Customs Hub and prepare for voluntary and mandatory use.
• Ensure that products sold through online platforms comply with EU safety and sustainability standards.

By getting ready early for these VAT changes, e-commerce businesses can keep doing well in the EU market and follow the new rules.