On July 1, 2021 the European Union (EU) will implement new import VAT regulations that will make all goods imported into the EU subject to Value Added Tax (VAT). These regulation changes are like the VAT regulation changes made by the United Kingdom (UK) earlier this year on January 1, 2021. The EU’s tax system can be complicated and confusing, not to mention expensive if you get it wrong! But don’t worry, Passport, Zono’s and AMS Fulfillment are here to help.
Passport has created a new product, the Passport EU VAT Compliance Solution, similar to their UK VAT Compliance Solution, that will keep you compliant with these new regulations without any of the headache. Please review the further details below and if interested in Passport’s EU or UK Compliance Solution, send Passport a note at [email protected]. If you are not using Passport and require similar support for EU Shipments you could also reach out to Zonos @ [email protected]. They are also experts in helping companies navigate through the international complexities and you can use their support services with any carrier.
Who is Impacted?
At a high level, most eCommerce brands currently selling into the EU will be subject to these new regulations. More specifically:
US sellers with no legal entity in the EU
Total order value equal to or less than €150 (not including transportation charges)
Goods not sold through a marketplace (e.g. Amazon, eBay)
Goods where VAT is charged when the order is placed
The Actual Details:
Abolishment of the €22 Import VAT Exemption for the EU: expect to collect VAT on most items that are imported into an EU Member State
Orders with a value above €150: No changes will be made to orders with a value over €150. They will continue to be handled by the carrier just as orders over £135 to the UK are currently being handled
Orders with a value of €150 or less, shipping DDP: The merchant will now be responsible for collecting and remitting VAT on all orders
Orders shipping DDU: The courier will still be responsible for collecting VAT from the end customer; however, abolishment of the Import VAT Exemption means that there is an expected increase in the number of packages inspected at customs
Here are all Your Options:
There are 4 different options you can use to navigate these changes. We have worked with Passport, Zono’s, UPS and others to research and understand the steps needed to implement each of these options.
1. Use Passport or Zono’s new EU Compliance Solution. They will handle VAT payments, remittance, fiscal intermediary obligations and compliance for all your shipments regardless of order value.
2. Register for Import One Stop Shop (IOSS)
3. Register for a VAT number in every country you do business in (not recommended due to complexity)
4. Set up a legal entity in the EU and register for OSS (Not recommended due to complexity)
If interested in utilizing Passport or Zonos versus IOSS as your solution for these changes, please let one of them know at the web contact addresses at the top of the page.
Registration begins this week.
JB/ Freight Freak
About the Freight Freak: John Bevacqua is the VP of Logistics at AMS Fulfillment. His area of excellence is in creating distribution and fulfillment operations that function as a capable interface between suppliers, retailers, and wholesale distributors. His experience includes developing and leading FedEx/ Kinko’s Distribution Services into the FedEx post acquisition, USA Wireless Technologies, and a top Logistics Management company. He has also worked with third party fulfillment companies, preparing him for his current position with AMS Fulfillment.