From 1 July 2021, the EU abolished the duty-free threshold: VAT is charged on the value of goods, and for packages up to €150, marketplaces (eBay, Etsy) can automatically collect VAT and remit it to the buyer’s country via IOSS.
What you need to know about customs rules in the EU
On July 1, 2021, customs rules in EU countries were updated. The main points you need to know:
- There is no duty-free threshold. VAT is charged on any amount of the goods.
- eBay and Etsy automatically collect VAT from buyers if the value of the item with shipping amounts to up to 150 euros. When processing delivery in this case, you must indicate the marketplace’s IOSS tax number. This is information for customs about VAT that has already been paid. Detailed instruction here.
- If your store uses the Shopify platform, you can become a tax agent, obtain an IOSS number, and independently collect VAT from buyers and remit it to EU countries. If you do not want to obtain a tax number, VAT will be charged at customs.
- If you are selling a product on Lavky, VAT will be collected from buyers at customs.
- If the value of the item including shipping exceeds 150 euros, VAT, customs duties and broker services will be charged at customs, regardless of where the item was sold.
- The amount of duty depends on the recipient country and the type of goods being shipped. When paying duties online, the processing fee for shipments is usually lower. The duty can be paid by either the buyer or the seller, but the duty is charged to the buyer. If VAT has been charged twice (at the marketplace and at customs), the buyer should contact customs in their country, provide a PayPal statement and an order from the marketplace with a request to review and cancel the duplicated tax.
Also when delivering parcels to EU countries EU countries you must specify the customs code of the goods (HS code).
The customs code helps determine the amount of import tax on imported goods. Based on the customs code, customs officers determine which goods are being imported. The tax amount may vary depending on the type of goods. The standard code is a six-digit number, but in some countries it may be 8, 10 digits.
When arranging delivery to EU countries through the Western Bid personal account, a field for entering the customs code appears.
Please note: you must specify the customs code not only when sending goods to EU countries, but always when processing any shipment!
This requirement is mandatory when crossing the customs border, regardless of the shipping method you choose.
You can select the customs code for your product category when creating a shipment in your account. In the corresponding field you can start typing the code in digits (if you know the exact code that fits your product), or in English and the system will show matches with existing codes from the international system. Please, for easier customs clearance and to avoid delays, choose the code that best fits your product.
Also in 2021, new rules for selling toys to EU countries came into effect (these rules do not apply to toy sales to other countries).
If your product resembles a toy and could be classified as a toy, to avoid delays at customs we recommend ticking the checkbox in the delivery form that your product is not a toy. In this case, the product description in parentheses will include the phrase “This not a toy”. In the description we recommend stating that it is a decorative item or a souvenir with a detailed description, indicating what it is, but without specifying the material.
If your product is absolutely not resembling a toy, you do not need to check the box. For example, a painting, a dog collar, a mug. If you do not check the box, nothing else will be written after your product description.
If you sell toys for children, you must meet all EU requirements for toy sales and attach all necessary documents to the shipment. If you do not have all the special documents, and you sell toys specifically, we recommend excluding EU countries and selling to those countries where such permits are not required. For example, the USA, Canada, etc.
Read about how to avoid double taxation in the article.
Frequently asked questions about the new EU customs rules
Is there currently a tax-free threshold for parcels in the EU?
Is there currently a tax-free threshold for parcels in the EU?
No. The duty-free threshold has been abolished: VAT is charged on any value of the goods, regardless of the amount.
When should the marketplace's IOSS number be provided?
When should the marketplace's IOSS number be provided?
When the item is sold on eBay or Etsy, and the total cost of the item including shipping does not exceed 150 euros. In this case, the marketplace charges VAT to the buyer, and the IOSS number must be indicated at the time of delivery.
Is it mandatory to obtain your own IOSS number for Shopify?
Is it mandatory to obtain your own IOSS number for Shopify?
No. You can become a tax agent and collect VAT yourself by obtaining IOSS, or not do this — then VAT will be charged at customs for each shipment to the EU.
What happens if the total cost of the goods including delivery is over 150 euros?
What happens if the total cost of the goods including delivery is over 150 euros?
In this case, EU customs will charge VAT, customs duties and broker services regardless of where exactly the goods were sold and whether IOSS exists.
Who can pay the customs duty and VAT: the seller or the buyer?
Who can pay the customs duty and VAT: the seller or the buyer?
Formally, customs duty is charged to the buyer, but payment can be made by either the buyer or the seller. When paying online, parcel processing is usually cheaper.
What to do if VAT was charged twice — at the marketplace and at customs?
What to do if VAT was charged twice — at the marketplace and at customs?
The buyer needs to contact the customs authorities in their country, provide all documents for the shipment, and submit a request for a refund of the overpaid VAT.