Online marketplaces and sellers may charge VAT for consignments of €150 or less at the customer's point of sale, determined by the delivery address of the e-commerce order—and they should. Presenting the customer with a total cost of ownership, including VAT and customs duties, upon checkout has become an expectation. Calculating this cost upfront—and accurately—is key to a positive customer experience, as “surprise” VAT charges after the sale often result in disgruntled customers and returned merchandise. Calculating and collecting VAT upfront also cuts down on delivery delays for parcels that are stuck in storage awaiting payment.
A further alternative would be for the postal service or courier to collect the import VAT from the customer and pay it to the relevant tax authority on a monthly basis. This scenario, however, risks greater goods refusal and return due to unanticipated charges.
The Import One-Stop Shop (IOSS) scheme has been introduced to simplify VAT reporting. It allows sellers to register and report VAT in just one EU State for sales across all Member States. Online marketplaces, sellers, or their intermediaries will need to file a VAT return through IOSS. Companies that are not eligible for IOSS must file a VAT return in each Member State for all consignments.
Submitting simplified dataset customs declarations
In the EU, declarations must be lodged for every consignment imported. In order to manage this enormous increase in volume of customs declarations, a new customs declaration with a so-called super-reduced dataset (BIRDS dataset in the UK and H7 dataset in the EU) has been introduced for release for free circulation of:
- low value consignments (under £135 in the UK and under €150 in the EU) of duty-free goods
- private-to-private consignments up to €45
- goods that are not subject to prohibitions or restrictions
Standard declarations may still be used, however the simplified datasets contain about one-third of the data elements of a standard declaration, which will greatly facilitate and accelerate filings, especially when dealing with a high volume of parcels.