From today, all goods that citizens will buy in the online sales environment and receive in consignments from countries that are not members of the European Union (EU) will have to file an import customs declaration and pay value added tax (VAT), the State Revenue Service (SRS) told LETA. ).
The current VAT exemption for consignments of low-value goods will be abolished in all EU Member States from 1 July.
When shopping in online stores or online sales platforms and receiving shipments from outside the EU, citizens are currently required to clear goods and pay taxes if the value of the goods in the shipment exceeds € 22. Goods with a value of less than € 22 are currently tax-free. On the other hand, on July 1, 2021, changes in the regulations will come into force throughout the EU, which stipulate that the VAT exemption will no longer apply to such shipments.
Consequently, all goods purchased by citizens outside the EU and received as an e-commerce consignment will be subject to VAT, regardless of the value of the goods. With the entry into force of the new rules, VAT will apply to all shipments delivered to the EU on or after 1 July, regardless of whether the purchase was made in advance.
In order to calculate and collect the amount of taxes payable to the state budget, information on consignments will have to be submitted to customs or the consignment must be declared to customs. The consignee will be able to choose the most convenient way of customs clearance of goods – either to fill in and submit the simplified import customs declaration for postal items in the SRS Electronic Declaration System, or to entrust this task to a supplier or other customs clearance specialist who provides the relevant paid services.
As before, goods with a value of more than € 150 will continue to be subject not only to VAT but also to customs duty. Excise duty will also be payable on excise goods. If the consignment contains goods that are subject to regulatory restrictions, such as medicines, fur clothing and others, it will not be possible to lodge a simplified declaration, a standard import customs declaration will have to be made.
If a third country online trader selling goods to buyers in the EU is registered on the IOSS portal (“Import One Stop-Shop”) of any EU Member State, he will collect VAT at the time of purchase and then transfer it to the budget of the country of destination. . In this case, the amount of VAT payable must be clearly and unambiguously indicated on the website where people shop, as well as on the purchase invoice. If the trader uses IOSS, the customs clearance of the shipments will be performed by the supplier – “Latvijas pasts” or express mail, but the residents will have no contact with customs formalities.
The rules on the application of VAT to goods received in low-value consignments, regardless of their value, apply equally to all EU countries. The aim of these changes is to restore a level playing field for EU traders and to protect Member States’ tax revenues by abolishing the VAT exemption for imports of low-value consignments and introducing VAT rules on the distance selling of imported goods.
From 1 July, customs declarations will also have to be submitted for all consignments – gifts that natural persons will receive from their relatives or friends living in non-EU countries. However, as at present, gifts or non-commercial items will continue to be tax-free if the value of the goods does not exceed € 45.
Additional information on the application and calculation of taxes, submission of declarations and other issues is available in the section “Customs / Postal items / Changes from 1 July 2021” on the SRS website.
At present, e-commerce rules require sellers to register for VAT in any Member State where their turnover exceeds a certain threshold, which varies from one Member State to another. From 1 July, these different values will be replaced by the same EU-wide threshold of € 10,000. Beyond that, VAT will be payable in the Member State of supply. To make it easier for these companies to work and to make it easier to sell goods to another Member State, online traders will now be able to register on an electronic portal, the so-called one-stop shop, which will be able to settle all VAT on EU sales. This threshold of € 10,000 has already applied to online electronic services since 2019.
The European Commission (EC) has stated that companies will no longer have to go through complicated procedures in other countries and will be able to register in their own Member State, in a language they can understand. Once registered, the online trader will be able to declare and pay VAT to this one-stop shop for all products sold in the EU by submitting a quarterly return. The one-stop shop will ensure that VAT is passed on to the Member State concerned.
The EC noted that a new one-stop shop for imports would operate in a similar style, allowing non-EU traders to register for VAT in the EU, ensuring that the Member State liable for VAT received the correct amount at the end. For consumers, this system will mean much more clarity: if you buy a product from a one-stop shop or a non-EU platform registered with an agency, the price paid to the dealer should already include VAT. As a result, customs or courier will no longer need to claim VAT separately after the shipment arrives in your country, as VAT has already been paid.
According to the EC, the changes aim to ensure a more level playing field for all businesses, simplify cross-border e-commerce transactions and help shoppers across the European Union (EU) to better understand price structures and make their choices as consumers.
The EC noted that the EU VAT system was last revised in 1993 and that it has not kept pace with the growth of cross-border e-commerce in recent years, which has significantly changed the picture in the retail sector. The new coronavirus pandemic has further boosted the growth rate of online retailing and highlighted the need for reform to pay VAT on online sales in the consumer’s country. The new rules also provide a simpler system for both buyers and sellers.
SJSC “Latvijas pasts”, with the entry into force of the new regulation, forecasts a significant increase in the number of customs cleared items, with the increase exceeding 100 times, the Chairman of the Board of “Latvijas pasta” Mārcis Vilcāns told reporters on Monday.
He pointed out that the number of customs items sent to Latvijas Pasts last year was 61,633, but this year the number of customs items related to brexite doubled in the period from January to May compared to the corresponding period last year, however, due to changes in EU regulations , the number of such shipments will increase further.
Vilcāns predicted that with the changes in the regulation, the number of customs cleared consignments could increase by 25,000 to 30,000 consignments per day, 95% of the total number of customs cleared consignments being “packages” from China.
The company also pointed out that the demand for “Latvijas pasta” customs brokerage services has increased – last year an average of 391 services per month were requested, while in the first half of this year – 700 services per month.
“Latvijas pasts” has also created a new application “Atmuito.pasts.lv”, in which for a certain fee, which will not exceed the euro and which will depend on the detail of the data indicated for each shipment, will allow customs clearance of shipments from third countries.
Mail has invested 290,000 euros in the development of the application and in the implemented data exchange functions, the provision of which is necessary for the operation of the application.
In-app shipments will be able to be cleared through customs by first receiving a text or printed invitation for a customs-cleared shipment that includes an individual link to the app. The link will be unique and relevant for declaring a specific item in the “Latvijas pasta” application. You will then need to verify your details and make a payment.
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