Goods on the Internet: Tips for customs and additional VAT not surprisingly unprepared – Practically

When shopping in a German online store, the shipment arrives from Great Britain – declaration, VAT and customs duty have surprised more than one buyer. The planned cheap and fast shopping in international online stores has become significantly more complicated and expensive, as not all shoppers have noticed that the new regulation for shipments received from outside the European Union (EU) has entered into force on 1 July. This has raised many questions, including misunderstandings about the final price of the shipment and the desire to give up purchases.

Citadele experts have prepared an explanation and advice to avoid unpleasant surprises.

From 1 July, EU law provides for significant changes in the application of VAT to e-commerce transactions: all consignments coming from outside the EU must be declared to customs and VAT must also be paid, regardless of the value of the goods. If previously shipments worth up to 22 euros were exempt from VAT and customs clearance, now a shipment worth a few cents must also be declared and subject to VAT. Shipments over 150 euros, on the other hand, have to pay both VAT and customs duty.

“The number of purchases on the Internet has increased significantly over the last year and a half and continues to grow – 51% more purchases were made with the card online and 66% more with Internet banking, compared to the first quarters of this year and last year. International online stores, including outside the EU, are among the top 30 shoppers’ favorite retailers. Often the price is the main criterion for favoring the international trader. With the new framework, the EU seeks to strengthen the position and competitiveness of local businesses with the e-commerce giants of other continents. Therefore, in view of the new regulations, it is worth considering before making a purchase whether it will not be much more profitable to place an order from local merchants, whose offer and functionality have become pleasant for buyers. Local entrepreneurs are actively integrating more convenient payment tools in their e-stores, including Klix offered by Citadele, and we see that the number of transactions and sales in local online stores is growing steadily, ”says Jānis Mūrnieks, Head of Citadele Bank’s Retail Services Department.

Pay attention to where the shipment comes from

One of the most common mistakes is to rely on the fact that the registration domain of the merchant’s website automatically means that the delivery will take place from the territory of the respective country. For example, when ordering goods from amazon.de, the purchase may be delivered from the United Kingdom, which has not been an EU member state for some time. Virtually all major shopping portals offer categorization of goods, including choosing from which country to receive the shipment. If the country window for the shipment of the product in question is not active, feel free to ask for help at the customer support center, as the shipment outside the EU will be more expensive, longer and potentially more problematic.

Check for double payment of VAT

There is a possibility that when ordering goods outside the EU member states, VAT is already paid on the trading platform. This precondition will be valid if the value of the shipment does not exceed 150 euros and the trader is registered in the European Commission’s Tax and Customs Association Import One Stop-Shop or IOSS. IOSS affiliation must be indicated on the merchant’s website, and VAT must appear as a separate item on the purchase invoice. Here, as a buyer, one must be very careful, because the EU regulation is fresh, but the amount of data processed by companies is huge, which often results in errors and misunderstandings. The customer must make sure that, firstly, VAT is applied and, secondly, that its rate is 21%. It is then the trader’s responsibility to inform the supplier of the VAT, which passes the information on to the customs office of destination. In Latvia, there have been cases when the buyer pays VAT in the e-environment, but the trader forgets to indicate it to the supplier, and the information does not reach the Latvian customs. In such a situation, in order to receive the goods, you must first pay double VAT, but then recover the money from the trader.

Gifts must be cleared through customs in the future

VAT and customs tax on gifts will not be paid in the future if the value of the shipment does not exceed 45 euros. However, from the beginning of July, a customs declaration must be lodged for all gifts sent outside the EU. Although many online stores sometimes shape their items as gifts, it should be remembered that this tax exemption applies if the non-commercial item is made by a natural person and sent to another natural person.

Without modern technology – the process is more expensive

In the customs clearance process, everyone can choose the most convenient way of customs clearance of goods – do it themselves, or entrust the shipment to the supplier. The customer can log in to the SRS electronic declaration system (EDS) by filling in the import customs declaration. You can also use the mobile application of Latvijas Pasts, express mail customs brokers or other customs specialists. It is significant that customs clearance of items up to 150 euros will cost 88 euro cents in the Latvijas Pasts app, while on-site post offices will be much more expensive and cost 3.99 euros.

Before buying, research the local market

Cheap and fast shopping in international online stores may not be possible, so it is worth exploring the local and EU offer. When ordering locally, the benefits will be significant – in addition to the financial aspect, it will save time filling in the declaration, as well as a predictable period of receipt of the goods, while products ordered outside the EU will have to wait in the warehouses of the responsible authorities. The EU’s offer will become much more attractive when it comes to relatively expensive orders. For example, if the amount of the shipment reaches 500 euros, you will spend at least 115 euros in additional costs, paying both VAT and customs tax, in the calculation of which the SRS import shipment classifier must be used. The offer of local internet merchants is growing every month not only in Europe, but also in the Baltics – this is evidenced by the number of Citadele bank’s internet payment tool partners Klix, which has reached almost 250 stores in Latvia and Lithuania.

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