The new VAT regulation aims to reduce the burden of VAT compliance for B2C cross-border e-commerce sales, ensure that VAT collection follows the principle of destination, and achieve a fair competition between cross-border e-commerce companies and EU physical sellers.
1.New regulations on VAT tax reform
New regulation implementation time: July 1, 2021, no transition period.
Key points of the new VAT regulation:
1）From 0:00 on July 1st, the EU customs will terminate the duty-free policy for imported goods whose declared value is less than 22 euros.
2) Introduce one-stop VAT tax declaration service: OSS (One-Stop Shop), which allows EU domestic sellers to declare and pay the VAT payable in all EU Member States only in One Member State.
3) For sellers from non-EU regions, EU establishes a one-stop Import service mechanism for goods with intrinsic value of no more than 150 euros: IOSS (Import-One-Stop Shop).IOSS and OSS play the same role. Non EU domestic sellers can choose one member country to register for IOSS.
4) Abolish the existing rules on the remote sales threshold of goods (35,000/100,000 euros), and unify the new threshold of 10,000 euros across the EU.
1)Deliver goods to 27 EU countries through PFC Dedicated Line
A.If you have not applied for the IOSS number, you can choose to pre-pay the VAT service when you forecast the order.Before this, you need to make sure that you have completed the connection with the Royal Logistics system, including the ERP system.
B.If the packages arrives at PFC warehouse at 9:00 on June 26, 2021, the IOSS number shall be provided. If the order is submitted before June 26, 2021 and the goods arrive at PFC warehouse after 9:00 on June 26, the IOSS number shall be filled in. If you do not have the IOSS number, the pre-payment VAT service shall be selected by default.
C.For parcels sold through third-party cross-border e-commerce platforms and delivered from non-EU countries to EU territory, please refer to the following:
2)Prepay VAT service fee standard
When you choose to pay VAT in advance, PFC will charge VAT in accordance with the tax rate of the destination country, plus a handling charge of 2% of the declared value, which will be used as the cost of paying VAT in advance and exchange rate fluctuations.
For example, the VAT tax rate in France is 20%, and the pre-paid VAT service will be charged at 22%.(Note: This service does not support VAT deduction operation)
3）About order filling requirements
A.The new regulations require the import declaration information to be provided with HS CODE. Therefore, please provide accurate information when forecasting orders.If you are not clear about the declaration information, please fill in the product name accurately, and the database will automatically match through the system.
B.In order to ensure the normal and rapid customs clearance of the goods, please truthfully declare the sales price of the goods, and do not make vague declaration or very low value. The risks of inspection delay, detention and fine caused by this shall be borne by the sender himself.
4)No IOSS number and do not choose the logistics solution of paying VAT in advance
A.Sellers who do not have IOSS number and do not choose to pay VAT in advance can choose DDU channels provided by PFC. The channels list is as follows
B.The above channels does not require an IOSS number, but requires you to complete the recipient's contact information so that the local customs can contact the recipient
C.The above option may cause the recipient to pay VAT and handling fee risk, please choose with caution.
Q:Does the EU tax reform have an impact on the delivery of PFC?
A: It will not affect the delivery. PFC will provide you with A variety of solutions.
Q:What percentage of VAT will the seller pay from July 1, 2021?
A: From July 1, 2021, VAT will be paid according to the destination country tax rate.For example, if a seller ships goods to Germany, the VAT rate is 19%, compared with 20% in France.
Q:For the goods delivered before July 1, they will arrive at the European customs after July 1, how to deal with this part of orders?Will the carrier collect from the customer?
A: Goods shipped before July 1 but arriving after July 1 will need to provide the IOSS number for VAT declaration and payment through the IOSS number.If IOSS is not provided, you will need to use the pre-payment service and pay VAT and duties at the time of import.
Q:If you sell on different platforms and have self-built websites, which IOSS number to use when shipping by PFC special line service?
Here's an example:
The seller sells products on Marketplace A, Marketplace B and his own website.
- Marketplace A has an IOSS registration
- Marketplace B is not registered for IOSS
- The seller has an IOSS registration
A)The seller must provide the IOSS number of Marketplace A and can clear customs in any of the 27 EU member states.
B) Seller sells through Marketplace B 1. Seller can use its own IOSS number for filing; 2. Sellers can also choose to use the pre-VAT clearance service of PFC
C) Seller sells Products through its own website, seller must use its own IOSS number and can clear products in any of the 27 EU Member States.
Q:How to choose the delivery channel for parcels over 150 euros?How is it taxed?
A: For parcels over 150 euros, it is recommended to choose the international express services of PFC, or choose the postal EMS service. VAT, customs duties and miscellaneous charges for customs clearance will be charged for packages above 150.
Q:After the new EU policy, how to clear goods under 22 euros?
A: Goods under 22 Euros are no longer exempt from VAT, and the customs clearance mode has not changed.
Q:Is the declared value tax-inclusive or tax-exclusive?Does that include shipping?
A: The declared value is equal to the sales price of the platform, including freight, but not including the VAT paid by the platform.
Here's an example:
Product A is sold at a price of 100 euros on a certain platform, and the platform will charge an additional 20%VAT to the customer. In the end, the platform will charge the customer 100+100*0.2=120 euros. In this case, the declared price is 100 euros.
Product A is sold at 100 euros on a certain platform, and VAT is included in the price, so the declared value is 100/1.2=83.33 euros
Q:Can packages with IOSS number and without IOSS number be delivered together?
A: Yes. For orders without IOSS number, you can choose the pre-paid VAT service provided by PFC later.
4.Overview of EU IOSS Knowledge
I. What is IOSS?
IOSS is the abbreviation of the Import One-Stop Shop.
In fact, IOSS is an electronic portal which was created to facilitate and simplify the declaration and payment of VAT for goods sold remotely by sellers from non-EU countries or regions.
II. Why should I register for IOSS?
After the registration of IOSS, non-EU countries/regions with less than 150 euros can be cleared at customs ports in any EU member states, which improves customs clearance efficiency and effectively avoids delays in customs clearance and additional logistics costs.
III. How to register for IOSS?
1. Application for registration can be submitted to the customs office of any of the 27 EU countries.
2. Only EU enterprises or companies with "middleman" qualification are accepted to submit registration application materials.
3. The middleman shall be responsible for VAT declaration and timely payment.
Information required: business license, legal person ID card/passport, information registration form, company articles of association, import and export license.