Post-Brexit shipping cheat sheet: Shipping into the EU

Welcome to the fourth [and final] part of our Post-Brexit shipping cheat sheet blog series! In this blog post, we will be tackling all you need to know about shipping to the European Union from outside of the EU including the United Kingdom, now that the UK has departed from the EU. Check out parts 1, 2, and 3 of the series:

• Part 1: Post-Brexit shipping cheat sheet
• Part 2: Post-Brexit shipping cheat sheet: Shipping to the UK after Brexit
• Part 3: Post-Brexit shipping cheat sheet: Shipping between the EU and the UK after Brexit

EU VAT 

As you may have read in our previous blog posts, the EU is rolling out a VAT scheme effective July 1, 2021. The law includes more options for VAT collection on low-value orders, but the most significant aspect for businesses shipping into the EU is the 22 EUR VAT de minimis going away. All orders going into the EU regardless of their value will be subject to VAT.

This is important to note because online retailers whose products are valued mostly at 22 EUR or less may not have worried about EU VAT before now.

For example, a 3 EUR pair of socks shipped to the EU will now be subject to VAT as of July 1, 2021.

Regarding VAT collection on low-value imports entering the EU, you can continue using the carriers' billing options of billing the sender, recipient, or third-party account numbers for payment of duties and taxes.

The EU has also introduced two new options that you can choose from for the collection of VAT on low-value imports (orders valued at or less than 150 EUR):

• Special Arrangement: The carrier collects the VAT from the recipient (not from the sender or a third party).
• IOSS (Import One-Stop Shop): The online retailer registers for a VAT number in an EU country of their choice, always pre-collects VAT at the time of checkout on their website, and remits it monthly to the EU country of registration.

The purpose of the EU VAT scheme is to level the playing field between EU and non-EU online retailers. Prior to July 1, 2021, non-EU retailers could ship low-value items into the EU duty and VAT free, while EU retailers have always paid VAT. Effective July 1, 2021, they are all taxed the same.

Duty 

We talked about preferential origin in previous blogs, but the point is… Ignore that! It does not apply to ROW (rest of world) online retailers shipping into the EU. This simply means any import into the EU valued at greater than the duty de minimis (€150) may be subject to the duty rates of the EU country of import. In other words, any order valued at or below €150 will not be subject to duty upon entry into the EU.

Examples to sum it all up 

Effective July 1, 2021…

• If you’re shipping a necklace into the EU that costs 19 EUR, this necklace will be subject to VAT because the VAT de minimis is gone. The shipment will not be subject to duty because it is below the duty de minimis of 150 EUR.
• If you’re shipping a 178 EUR pair of sneakers to the EU, this shipment will be subject to VAT and duty because it is above the duty de minimis of 150 EUR.

Key factors to remember

• The EU has introduced 2 new options for VAT collection on low-value imports (orders valued at or under 150 EUR).
• All orders entering the EU will be subject to VAT regardless of their value because the 22 EUR VAT de minimis is going away effective July 1, 2021.
• Duty is still applied to orders entering the EU valued at over 150 EUR.

Feeling overwhelmed? 

Now that you know what to consider when shipping into the EU, you may be feeling like it’s a lot to manage. Zonos can help you with this.

Why Zonos? 

Zonos specializes in accurate landed cost and cross-border ecommerce with software to make international selling simple. Zonos stays on top of the non-resident country taxation for Landed Cost Guarantee customers by keeping track of thresholds for each country and collecting taxes at the appropriate time, so you won’t over or under collect, along with remitting quarterly taxes for you to each government entity.

Congratulations! You’ve made it through our entire Post-Brexit shipping cheat sheet blog series and are officially ready for cross-border trade after Brexit.