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The European Union is removing the current VAT de minimis threshold of €22 for all imports. From July 1, 2021, the abolition of the de minimis threshold means every EU e-commerce transaction will be subject to EU VAT and a Customs Declaration.
What is a de minimis threshold?
A de minimis threshold is a value set by a country to apply customs duty and tax rates on imported goods. If the value of the shipment is below the threshold, it can be cleared without incurring customs duties or taxes. The EU is abolishing this threshold altogether, thus all imports – regardless of value – will be subject to VAT from July 1, 2021.
Non-EU e-commerce businesses which sell low-value goods to countries in the EU will be most affected.
Conforming to these upcoming European regulatory changes will help your business:
The rapid growth of cross-border e-commerce in recent years means current EU VAT policies are outdated, and favor non-EU merchants who are not subject to the same VAT rules as those in the EU. European merchants have to pay VAT for all transactions, while merchants outside of the EU member states do not. Non-EU merchants can pass on these savings to customers, giving them an unfair pricing advantage over their competitors.
In addition, the EU loses out on billions of lost VAT revenue every year with the current rules; it’s estimated the new requirement will raise an additional €7 billion in VAT revenue, annually.
Since the UK left the European Union on January 1st, 2021, customs declaration is now needed for shipments from the UK to the 27 EU member states and vice versa.
Customs authorities are increasingly requesting complete and accurate goods descriptions in order to perform security/safety screening before shipments even leave the origin country. Without this precise information, DHL will not be able to transport your shipment.
It’s all in the details: examples of acceptable goods descriptions
Clothing Men’s Shirts, Girls’ Vests etc.
Food Rice, Powdered Eggs, Dried Apricots etc.
Home goods Plates, Dishes, Tableware etc.
Machine parts Pump, Seals, Engines etc.
DHL Express expects to receive both your commercial invoice data and shipment data together electronically*. This will enable DHL to clear your shipments through customs without delays. The customs clearance process can start immediately, providing huge advantages in terms of service quality and lead-time performance:
For an overview of key commercial invoice data element categories, click here.
*If you are not yet providing DHL Express with complete and accurate commercial invoice data electronically, please contact a sales representative to learn more about the options available to your business.
The online cross-border market in Europe was worth 146 billion euros in 2020, representing 25.5% of total online sales1.
The new EU regulatory changes might all sound like a lot of extra admin and hassle, but there are some extra steps you can take to make it easier:
This is an electronic portal the EU has introduced where you can register to get a single VAT IOSS ID number that applies to distance sales in all 27 EU countries. This will simplify the process by enabling you to collect, declare and account for VAT and pay your bill directly to the EU Tax Authorities via a periodic tax return (for goods up to the value of €150).
This allows you to postpone payment of customs duty, excise duty and VAT by up to 46 days. Instead, you can pay fees for all shipments once a month by Direct Debit rather than per consignment at the point of import. This means your shipments can clear customs quickly, without delay, and help you manage cash flow better.
Remember, cross-border shipping doesn’t have to be complex! Partnering with DHL means your business will benefit from our international expertise and knowledge of local markets, leaving you with more time to concentrate on growing your business. Speak to a DHL rep today for further advice to ensure your business is ready for the new EU regulations.
1 - E-commerce News Europe, March 2021
2 - PayPal survey, Digital Marketing Community, 2018