From 1 July 2021, VAT will be collected on all import consignments regardless of their value. Thus, when purchasing goods from foreign e-shops, it will be necessary to consider, among other things, whether the product price includes or excludes VAT. Crucial is who will pay the VAT on imports – the seller or the buyer – and whether any simplification procedure will be applied to collect VAT.
The harmonisation of conditions for EU and foreign businesses engaged in the sale of goods to end-customers has necessitated the cancellation of the exemption from import VAT on consignments of low value. In compliance with the ‘E-Commerce VAT Amendment’, this change shall enter into effect on 1 July 2021.
This means that customers will have to pay more attention to the conditions under which they purchase goods from e-shops selling foreign goods, in particular whether the price of goods given by the e-shop includes import VAT. Where the seller undertakes to pay VAT on import, they may choose to proceed under the One-Stop-Shop (OSS) scheme, namely the import OSS (IOSS). We already wrote about this in the April issue of the Tax and Legal Update. The payment of tax using this simplification procedure will only be possible for consignments costing up to EUR 150 and not liable to excise duty.
The seller shall register in the particular OSS module and obtain a tax registration number for import purposes. If the supplier is not established in the EU, they must arrange an intermediary. Upon the import of goods into the EU, the tax registration number is then submitted (usually through a carrier) to customs administration representatives. VAT on import is not paid at the customs office but declared and paid via VAT returns filed monthly through the IOSS.
In contrast, where the price of goods purchased on an e-shop is not all-inclusive, i.e. does not include import VAT, the end customer will be responsible for the payment of relevant VAT. For consignments costing up to EUR 150 and not subject to excise duty, it will also be possible to apply certain simplifications if the transport of goods is ensured by an entity holding a special permit for a special customs regime for the import of goods. The carrier will then collect the relevant VAT from the end customer who will be relieved of the standard customs procedure, i.e. will not have to go through customs clearance by themselves.
Sellers of goods from abroad should therefore consider all possible options and decide on the most appropriate and convenient collection of VAT on the import of goods for both themselves and their customers.
Kateřina Klepalovákklepalova@kpmg.cz+420 222 124 324
Petra Němcovápnemcova@kpmg.cz+420 222 123 781