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New EU VAT regulations since 1 July 2021
31.10.2021

On 1 July 2021 the new Value-Added Tax (VAT) rules for cross-border e-commerce finally came into effect in the European Union. On 20 October the Belgian-Chinese Chamber of Commerce (BCECC) organized an online China – Belgium Customs event. Mrs. Isabelle Bédoyan, Customs Counselor at the Embassy of Belgium in Beijing, gave a presentation about the new regulations and its implications for the Belgian-Chinese business community and Belgian consumers.  

To create a level-playing field for both cross-border e-commerce and trade within the European Union, to ensure that the collected VAT reaches the country of the end-user of the goods and in order to better monitor all goods entering the EU, new customs rules are implemented for all purchases from outside the EU. 

The main changes can be summarized as follows:

  • Now VAT will be charged on all commercial goods imported into the EU, regardless of their value. Previously all goods up to EUR 22 were exempted from VAT.
  • For shipments with a value up to EUR 150, VAT can either be charged at the time of the sale by the seller and refunded by using the new Import One-Stop Shop (IOSS) portal or, in case IOSS is not applied by the non-EU shipper, collected from the end-consignee by the shipper before delivery of the parcel.
  • In some cases online marketplaces enabling sellers to sell their goods to end-users may be responsible for charging, reporting and remitting the VAT due from the end-user for B2C goods up to EUR 150.

Many businesses will be affected, but the changes will mainly impact business-to-consumer (B2C) sales and online marketplaces, including those based within the EU and those based outside the EU that are selling to customers in the EU. All imports into the EU now must be declared using an electronic declaration.

The corona pandemic has accelerated the boom in online retail and underlined the need for reform to ensure that the VAT due on online sales gets paid to the country of the consumer. The new rules also respond to the need to simplify life for shoppers and traders alike. 

The benefits for the retailer are:

  • Reduced administrative overheads: once your business is registered as an IOSS seller in one EU member state, you can use this registration to do business in the entire EU. The VAT return and payment is due in the country of registration.
  • Reduced customs clearance times: goods imported by an IOSS seller will only be checked for a valid IOSS number before being dispatched to the customer. Goods sold through unregistered businesses can only be cleared after VAT has been collected.

To summarize, the benefits of the new VAT regulations are clearly wide and varied. Consumers will appreciate knowing that when buying goods online from outside or inside the EU, the VAT applied is the same as for goods acquired in their home country. The European Digital Single Market aims to make technology work for people in a fair and competitive digital economy. EU citizens will see public revenues increase and thanks to increased VAT payments and less VAT fraud, all member states will benefit.

Please contact Horsten International or Mrs. Isabelle Bédoyan directly at isabelle.bedoyan@minfin.fed.be in case you need more information. 

Sources:

This is an abstract from an article written by Bart Horsten and published on the WeChat account of the Belgian-Chinese Chamber of Commerce on 28 October 2021.

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