European Union New VAT rules effective July 1, 2021

As of the 1st of July 2021, goods valued at €22 or less that are imported into the EU will no longer benefit from exemption from VAT. This means that as of this date, all goods will be taxed, regardless of their commercial value. Above the €150 threshold, international customers are still obliged to pay customs duties upon importation into the EU. The VAT rate is the one applicable in the customer’s EU member state.

In practice: how it works

Imagine you’re importing a €10 underwear to Europe. Currently, there is no need to pay any customs fees or taxes, so the customer would still only pay €10. As of the 1^st of July 2021, the same underwear arriving in Belgium, for example, will be subject to a customs fee of €15. 21% VAT will then be surcharged on the total amount (€5.25). VAT rates and customs fees vary depending on the destination country.

In this case, the customer will be charged €30.25 for the same underwear. If you are an IOSS supplier, however, your customer will only have to pay the VAT surcharge. (21% VAT on €10, i.e. €2.10)

Customer Obligation

It is the responsibility of the buyer to settle the tax and custom duties applicable to their purchase. Shipping and delivery may get delayed if dues are not paid accordingly.