Introduction
E-commerce has grown exponentially over the last couple of years, leading to a substantial increase in the sale, import and export of low-value consignments. The existing VAT provisions created price disadvantages for EU-based sellers and encouraged fraud by under-declaring the value of imports. Furthermore, the existing customs provisions relating to the declaration requirements for low-value consignments are scattered and unclear.
This has prompted the European Commission to review the EU provisions regarding import VAT and to review certain customs declaration requirements.
The new VAT rules are intended to combat fraud and to create a level playing field between EU-based and non-EU-based sellers. The amendments and additions in the customs declaration provisions aim at facilitating the levy of import VAT on low-value consignments, clarifying existing simplifications, reducing additional administrative costs for operators as much as possible and creating a level playing field between postal operators and express fast parcel operators.
Imports
Currently, consignments with an intrinsic value of ≤ EUR 150 and not consisting of alcohol products, perfumes, “eau de toilette” (grooming water) or tobacco products are exempt from import duties. If the value of these consignments is ≤ EUR 22, they are currently also exempt from import VAT.
In addition to the import duty and VAT exemptions, certain simplifications exist for removing the requirement to lodge a (full) customs declaration. Specifically, the following simplifications apply:
1. Goods with an intrinsic value of ≤ EUR 22 are deemed to be declared for release for free circulation by simply presenting them to customs;
2. Goods imported via postal consignment and with an intrinsic value of ≤ EUR 150 are deemed to be declared for release for free circulation by simply presenting them to customs;
3. Goods imported via postal consignment and with an intrinsic value of ≤ EUR 1000 can (generally) be declared for free circulation using a simplified declaration (‘reduced dataset’) or by means of the international CN22 or CN23 declaration.
On 1 July 2021, the import VAT exemption for consignments with a value of ≤ EUR 22 will be removed.
The customs declaration simplification mentioned under 1 above will also be removed as of 1 July 2021.
Lastly, the customs declaration simplification for postal consignments mentioned under 2 above and the possibility to use the CN22 and CN23 declaration under 3 above will be removed once the UCC import control system 2 (ICS2) is implemented.
From that day, all operators, including postal operators, will be required to submit (at least a simplified) customs declarations and will no longer be able to declare the goods by simply presenting them to customs and/or using the CN22 or CN23 declaration.
To reduce the administrative burden, the European Commission created the so-called ‘super reduced dataset’ for consignments with an intrinsic value of ≤ EUR 150. This simplified declaration requires significantly less data than a full declaration (or even the already existing simplified declaration for some postal consignments) and can be applied by anyone insofar as the goods are not subject to any restrictions and the VAT exemption for import followed by an intra-Community supply is not applied.
Exports
Similar to imports, customs declaration simplifications also exist for exports. The current simplifications for e-commerce relate to export consignments with an intrinsic value of ≤ EUR 1000.
Insofar as these types of consignments are not subject to export duty and they are exported via a postal service, they are deemed to be declared for export by their simple exit from the customs territory of the Union. No export declaration or presentation at the customs office of exit is required.
An important question is whether similar consignments that are exported via express/fast parcel operators can already benefit from this simplification too. Although the customs provisions always suggested so, the European Commission indicated that this was earlier not the case, as it assumed in its Delegated Regulation (EU) 2020/877 of 3 April 2020 that these types of consignments, according to the rules before the amendment, had to be declared either by means of a full declaration or orally, which required the presentation of the goods at the customs office where the goods exit the EU.
Because the European Commission identified the negative effects of this distinction between postal operators and express/fast parcel operators, it aimed to remove the requirement for express/fast parcel operators to lodge an oral declaration at the customs office where the goods exit the EU and aimed to move this to an inland customs office. The customs office competent for the place of exit may only request to examine the goods on an ad hoc basis.
To that effect, Commission Delegated Regulation (EU) 2020/877 changed some provisions. Under the amended rules, goods in postal or express consignments with a value of ≤ EUR 1000 and which are not liable for export duty will (automatically) be deemed to be declared for export, without the need for a(n) (oral) customs declaration.
However, if it is a postal consignment, the sole act of crossing the frontier suffices, whereas, according to the new provisions, express consignments would still need to be presented at the customs office of exit and the data in the transport document and/or invoice must be available to and accepted by the customs authorities.
Conclusion
The new import VAT provisions create a more level playing field between EU-based and non-EU-based sellers. How effective it will be to combat fraud remains to be seen.
The requirement to submit customs declarations for low-value consignments – albeit with very limited data – provides the customs and tax authorities with additional information allowing them to identify and, where appropriate, question imports.
The introduction of the ‘super reduced dataset’ for low-value consignments facilitates e-commerce, but still requires a customs declaration to be lodged and therefore administrative costs. In addition, the implementation date of some customs declaration provisions is a moving target and actual implementation timing may differ from country to country, potentially creating confusion within the sector.
Once all provisions are fully implemented, the distinction for imports of low-value consignments between postal operators and express/fast parcel operators should be removed, creating a level playing field between international express/fast parcel operators and the local postal operator that provides similar services.
Whether the distinction between postal operators and express/fast parcel operators will also be removed for exports of low-value consignments is not completely clear.
The new rules align express/fast parcel operators insofar as consignments are automatically deemed to be declared for export and no (oral) declaration is needed. However, the new rules also suggest that express/fast parcel operators would still be required to present the goods to the customs office of exit and to ensure that the data in the transport document and/or invoice are available to and accepted by the customs authorities.
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