EU Import schemes for non-EU suppliers engaged into B2C E-Commerce sales as of Jan 1, 2021

The EU Notice dated 16 April 2020 prescribes two options of treating sales transactions for the third country sellers intending to distance sale the goods to the EU customers post 1 January 2021.

Option 1

• Applicable for all products imported from third countries or territories up to the value of EUR 150 except the goods subject to excise duties.
• The supplier is required to charge and collect VAT at the point of sale to EU customers.
• The supplier will have to declare and pay VAT to the Member State of Identification via a One-Stop-Shop (OSS).
• As the supplier would be registered entity in third country / territory and will not be registered in any member state, he is free to choose his member state of identification where he will be required to register under OSS scheme. Through this OSS registration, he will have to declare and pay VAT on distance selling. For this purpose, the supplier would be required to appoint an intermediary established in EU e.g. courier, postal operator or customs agent
• This OSS registration will be in addition to the supplier’s existing VAT registration in its respective country / territory.
• As OSS schemes shifts the place of supply at the point of consumption; VAT declared by the supplier in Member State of Identification will be transferred to Member State of consumption basis the supplier’s declarations.
• Under this scheme, the goods imported by EU customer would be exempt from VAT upon importation resulting into fast track clearance process.

Option 2

• Import VAT due in respect of goods for which the dispatch or transport ends in the Member State of importation will be paid by the customs declarant (e.g. a courier, postal operator or customs agents) to the customs authorities via monthly payments
• The same will be collected from customers by customs declarant.

With the introduction of the above two schemes, the current VAT exemption for goods imported in small consignments of a value of up to EUR 22 will be abolished.

Source Credit – Sampada Borkar

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