VAT rules for cross-border business-to-consumer (B2C) e-commerce activities will change as of July 1, 2021.
What do these changes mean for online retailers?
From that date all low-value shipments (not exceeding 150euros) sent to the EU will be subject to VAT, this applies both for shipments from a third country and EU member countries. In addition to this, a declaration for all packages will have to be submitted to customs and taxes will have to be paid according to the VAT rates of the country.
To make things easier, the EU Union has created the IOSS, a portal where retailers can collect, pay and declare VAT.
Is IOSS convenient for ecommerce?
The IOSS can simplify the fulfillment of ecommerce VAT obligations on distance sales of imported products, retailers will be able to create a much more transparent and faster purchasing process for their customers.
One of the advantages of IOSS is that it can replace the current obligation to register in all countries to which you distribute goods in the EU. Just registering in one country will cover all other countries.
The IOSS simplifies the process for the buyer, as only the total cost (including VAT) will be charged at the time of purchase, with VAT paid the adjoining processes will be much faster thus avoiding retention of goods and extra costs when the goods are delivered.
If the company is not registered with IOSS, the customer must pay the VAT and customs clearance fees. These fees are usually much higher, and it is to be expected that customers prefer to buy from other ecommercers who can take care of the taxes.
Contact the Crossboderit team to get the advice you need on the new IOSS and also be your IOSS Representative.
CBIT has it covered for you. With simple onboarding and flat, simple shipping rates, it will be a breeze to calculate duties, collect them, even pay them for you. Plus CBIT offers simple DDP for these solutions for an excellent hassle-free customer experience.
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