Within the next five years, the European Union’ has said that they want to align the rules on VAT and customs for low-value goods. The intention is that by 2028 ecommerce sales to the EU would incur duty regardless of value.
Currently, goods valued at less than €150 sail through the borders without incurring duty. The problem is that while there is a level at which collecting duty just isn’t worth the paperwork and is often just a few cents, there are plenty of fraudsters who seriously under value items on declarations to avoid paying significant amounts of duty – perhaps as much as 65% according to the EU.
This is a big deal for EU countries finance as it’s estimated that some €750 million will be gained from the customs reforms.
What this means for many small businesses who trade low-value goods below €150 is that more paperwork is coming. In theory, it’s just a case of adding on tax but the reality is that you probably can’t charge the end consumer a higher price so may end up absorbing the tax anyway. Businesses that are based within the EU will probably welcome the change as it will naturally make them more competitive.
The EU Commission is said to be planning a new EU Customs Authority to be up and running within five years and a new EU Customs Data Hub to facilitate information sharing between EU countries to simplify customs proceedures.
One Response
This article is incorrect.
VAT is charged on all parcels regardless of value.
Only customs duty is not charged on parcels under 150 euros. This is the exemption that will be abolished in 2028.