EUROPEAN UNION (EU) VAT DE MINIMIS REGULATORY CHANGE OVERVIEW

GET FULL DETAILS ON WHAT THAT MEANS FOR YOU AS A SHIPPER AND RECEIVER

ARE YOU A RECEIVER IN THE EUROPEAN UNION

EUROPEAN UNION (EU) VAT DE MINIMIS REGULATORY CHANGE OVERVIEW

The Value Added Tax (VAT) rules in the European Union (EU*) were amended and the changes become effective as of July 1st 2021:

  • Previously, commercial goods imported into the EU up to a value of 22 EUR were exempted from VAT.
  • As of July 1st, all commercial goods imported into the EU will be subject to VAT and will require formal customs declaration.

But don’t worry, DHL will support you in every step of the way by taking care of:

  • All customs clearance formalities and
  • providing you with an easy VAT payment solution

This is how it works:

A) If you need to pay VAT (or other associated Customs charges):

  • If you already have a DHL account, DHL will bill your account.
  • If you do not have a DHL account, DHL will send you a link for payment to be made online – please make the online payment as soon as possible to ensure a smooth delivery of your shipment.

B) If the VAT (or other associated Customs charges) were already paid (i.e. the purchase price already included VAT):

  • No further payment needed from your side.

IMPORTANT:

If you have been asked to pay VAT (or other associated Customs charges), but are expecting a shipment without VAT (or other associated Customs charges), please contact your shipper/seller of the goods for clarification.


Some examples might include:

  • Shipper has not included VAT amount as part of the retail price.
  • Shipper has not provided the correct information to DHL such as correct goods value.




* European Union (EU) countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

ARE YOU A SHIPPER TO THE EUROPEAN UNION

EUROPEAN UNION (EU) VAT DE MINIMIS REGULATORY CHANGE OVERVIEW

The Value Added Tax (VAT) rules in the European Union (EU*) were amended and the changes become effective as of July 1st 2021:

  • Previously, commercial goods imported into the EU up to a value of 22 EUR were exempted from VAT.
  • As July 1st:
    • All commercial goods imported into the EU will be subject to VAT.
    • All imports of goods into the EU will require a formal customs declaration.
    • A new (optional) VAT collection scheme will be introduced for online sellers/online platforms, known as Import One-Stop Shop (IOSS) – only applicable for B2C transactions of goods up to 150 EU

WHAT DOES THIS MEAN FOR YOU?

1) Formal Customs Declaration

  • In order to ensure a smooth customs clearance at destination, it is KEY that you provide accurate Commercial / Pro Forma invoice data, such as goods descriptions, itemized values, HS code, and other information. Generic description such as “samples” or “spare parts” are not allowed.
  • Click here for an overview of the key information to ensure a smooth clearance.

2) VAT payment

  • As of July 1st 2021, you can chose between the following options to pay VAT for goods imported into the EU:

(A) Without IOSS (for B2C or B2B | any goods value)

(B) With IOSS (only for B2C | only for goods up to 150 EUR)

If you opt for NOT using the new (optional) VAT collection scheme known as Import One-Stop Shop (IOSS), you have the following options:

DHL pays VAT to Authorities upon import (and then DHL charges the pre-selected payer)
or
Importer pays VAT directly to Authorities upon import (via its own import deferment account)

If you are an online seller and opt for using the new (optional) VAT collection scheme known as Import One-Stop Shop (IOSS), the following applies:

VAT collected by the ONLINE SELLERat the moment of purchase  (and ONLINE SELLER then pays to the local Tax Authority in EU via monthly VAT return)

NOTE:

  • As it is today, if you pre-select to pay all DHL charges when booking a shipment (on behalf of your customers/ receivers of the goods), then VAT will be outlaid by DHL, and then charged back to you (together with other Customs-related charges if applicable).
  • This ensures no charges to your customers/receivers of goods.
  • This service is known as the DHL Duties & Taxes Paid (DTP) Billing Service – please contact your DHL representative for more information.

NOTE:

  • IOSS removes the need to register for VAT payment in each EU country that you sell to (only for B2C goods up to 150 EUR), and a single IOSS identification number applies in all 27 EU countries.
  • If you are not an EU-based seller, you must appoint an intermediary (such as a tax representative) to fulfil VAT obligations on your behalf.
  • The IOSS registration is done by the online seller of goods. If goods are sold via an online marketplace, then the online marketplace is the one that can be IOSS registered and fulfil VAT obligations (and the IOSS number of the marketplace has to be provided in this case).
  • Click here for additional information about IOSS

IMPORTANT:

  • If you opt for using IOSS, you must provide the IOSS identification number electronically to DHL with the invoice data so DHL can use it in the Clearance Process – otherwise, VAT will be levied upon the import of goods.

* European Union (EU) countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

EU VAT DE MINIMIS UPDATE FAQ

Why is the VAT De Minimis for imports being removed in the European Union as of July 1st 2021?

With the VAT De Minimis Removal, the EU aims to level the playing field, protect its businesses and avoid unfair competition and distortion for EU companies. Under current rules, imported goods bought from non-EU countries can be exempt from VAT if they cost less than 22 EU However, if products are purchased within the EU or in country, VAT is always levied, regardless of the value. The EU believes this exemption puts EU businesses at a disadvantage to non-EU businesses.

Note: The current De Minimis threshold for Customs duties will not change, remaining €150.

How can shippers avoid that VAT (and other Customs-related charges) are charged to receivers of goods?

As it is today, if a shipper pre-selects to pay all DHL charges when booking a shipment (on behalf of the receiver of the goods), then VAT will be outlaid by DHL, and then charged back to the shipper (together with other Customs-related charges if applicable, e.g. Bonded Storage, Multiline Entry, etc.). This allows the shipper to be able to sell goods to a receiver on an all-inclusive price basis, avoiding charges to the receiver. This service is known as the DHL Duties & Taxes Paid (DTP) Billing Service – please contact your DHL Representative for more information.

What is an EU established intermediary for IOSS?

The intermediary is a taxable entity registered in the EU that provides fiscal agent services. That entity has to fulfil the obligations laid down under IOSS, including the declaration and payment of VAT on the distance sales of imported goods. The intermediary will receive an IOSS VAT identification number for each taxable person for whom that intermediary is appointed.

My company is not established in the European Union. Can DHL act as intermediary so I can use IOSS?

No, DHL does not act as intermediary for IOSS/VAT purposes.

Where can I find additional information regarding the VAT De Minimis Removal and IOSS?

The latest information on the VAT De Minimis removal can be found on the EU’s website, along with further details regarding IOSS.