Handling the administration relating to customs and cross-border selling is hardly the most exciting element of online retail. But keeping up to date with regulatory changes is key if you are to continue to provide a smooth, cost-effective and efficient service for consumers. With this is mind, if your business is already selling to the EU – or if you have plans to do so – then July 1st is a key date for the diary.
From 1st July 2021, the VAT rules on cross-border business-to-consumer (B2C) e-commerce activities will change. The rationale behind these changes is to overcome the barriers to cross-border online sales and address challenges arising from the VAT regimes for distance sales of goods and for the importation of low-value consignments.
At present, no formal customs declaration is required for shipments below a goods value of EUR 22. However, as of July 2021, all shipments below EUR 22 will require such a declaration – for which you must provide the correct customs data.
The good news is that help is at hand to overcome this latest administrative requirement.
To ensure a smooth transition to the new VAT system, the EU has created the Import One-Stop Shop (IOSS). This is a simple to use digital portal that facilitates the collection, declaration and payment of VAT for sellers. Businesses can use the IOSS from the 1st of July 2021 to meet their VAT e-commerce requirements on distance sales of imported goods.
There is no obligation to register for the IOSS but it is important to know what is at stake. If you do register, your customers will appreciate that the price they pay represents the final price, VAT included, with no hidden charges or fees.
If you do not register for the IOSS, VAT will be paid by your customer upon importation of goods in the EU. Postal operators or couriers may charge the customer an additional clearance fee to collect this VAT and complete the necessary formalities upon importation of goods.
There is a real customer-experience factor at play here. EU consumers are used to prices including VAT, so to be met with additional charges on the doorstep may lead to goods being rejected, not to mention longer-term mistrust of the brand.
Ultimately, international expansion plans should not be hindered by administration. We have many years’ experience in helping e-commerce providers of every size fulfill their cross-border growth ambitions. If you would like more guidance on selling internationally – or around the IOSS specifically – then please do give us a call and get in touch.