EU Shipping – Customs and VAT Charges Update 2021

EU shipping is changing. From 1 July 2021 the value added tax (VAT) exemption for the importation of goods with a value not exceeding EUR 22 will be removed. As a result, all goods imported to the EU will be subject to VAT.

Changes for Consumers

What changes are being made to EU shipping?

From 1 July 2021, the EU is removing the €22 VAT exemption for imports meaning all goods exported exported from the UK to the EU - regardless of value - will now be subject to VAT. Gifts are an exception to these changes for consumers and no VAT or customs charges will apply to gifts under the value of €45.

What qualifies as a "gift"?

Gifts are generally regarded as items up to the value of €45, sent from one individual to another. Items purchased from online marketplaces like eBay or Amazon will not be classified as a gift under the new regulations (even if they are marked as a gift). These items will incur standard VAT and potential customs charges, depending on and according to their origin.

How is VAT paid by customers?

If the item is not a gift, senders face two scenarios when it comes to VAT charges and customs duties.

1. Let the recipient pay any VAT and customs duties. This is also known as 'Delivery Duties Unpaid (DDU)'. When the parcel reaches its destination country, customs will approach the recipient to collect any necessary charges. Once these charges are paid, the parcel is released by customs and delivered by the recipient.
2. The sender can choose to pay all costs required to bring the parcel into the destination country. This is known as 'Delivery Duties Paid (DDP)'. Nothing is required from the recipient and the parcel will get delivered directly.

Changes for Business

What changes are being made to EU shipping?

From 1 July 2021, the EU is removing the €22 VAT exemption for imports meaning all goods exported from the UK to the EU - regardless of value - will now be subject to VAT. Gifts are an exception for consumers, but this exception will not apply to businesses.

Import-One-Stop-Shop (IOSS) is being launched to give businesses an opportunity to settle VAT in the EU more efficiently.

Online Marketplaces will now be responsible for EU VAT compliance on UK goods sold to EU consumers and up to a value of €150.

How will the Value of Goods to the EU be calculated?

The value of goods is the net price (cost of goods + shipping) charged by the online business at the point of sale.

What is IOSS and should I use it?

Import-One-Stop-Shop (IOSS) is an electronic portal designed to help businesses comply with VAT obligations on UK goods sold to EU consumers and valued up to €150. IOSS allows businesses to declare VAT upfront and pay online on a monthly basis. IOSS will save UK businesses, online sellers and their EU customers time and effort by dealing with VAT at the point of sale rather than the point of import/ prior to delivery. Click here to learn more about IOSS.

Who should be using IOSS?

Businesses: Any UK business selling goods to EU consumers with up to €150 should consider using IOSS unless you're selling on a marketplace like Amazon.

Marketplace Users: If your business only sells through a marketplace like Amazon or eBay, it is the responsibility of the marketplace to collect applicable EU VAT charges and pay them to the relevant EU Tax authority. You'll be given an IOSS number by the marketplace.

What about items valued over €150?

The new VAT regulations (and IOSS) do not apply to goods worth over €150. If your business sells goods to EU consumers with a value greater than €150, you'll need to pay local VAT via DDP from 1 July or the recipient must pay DDU to delivery. You may also need to pay additional taxes and duties depending on the origin of the goods sold.

How can I register for IOSS?

UK online sellers and marketplace platforms can register their business on the IOSS portal of any EU member state. Click here to visit the portal complete with links and relevant contact details for the new EU shipping guidelines. To register for IOSS, you'll need to appoint an intermediary who will submit monthly IOSS VAT returns that contain the total value of goods sold, along with the values and total VAT amount to be paid. They'll be able to break the figures down and separate them out across the countries where the goods are transported to. The intermediary will inform you of the amount due according to the figure declared on the IOSS VAT return.

How is VAT calculated?

IOSS VAT is calculated using the following formula:

Value of Item + Shipping Cost x VAT Rate of Destination Country

Let Speedel do the heavy lifting

Here at Speedel, we pride ourselves in making EU shipping simple. We're business specialist same day couriers, trusted by businesses in a number of industries to send and receive items across the UK, Europe and around the world.

Our Express Europe courier service has been designed to make trading with Europe as easy as possible, following the Brexit transition period and the formation of a new trade deal between the UK and EU. We have access to all points of Europe via express road delivery and provide courier options 24/7 and 365 – ideal for one-off deliveries or regular shipments. Click here to learn more and request a quote.