Why is accuracy important
Today, products worth less than €22 ($26/£20) are exempt from VAT. The European Commission believes that some packages declared as goods below €22 ($26/£20), in fact, cost more.
The EU reckons member states may lose out on up to €7 billion ($8.42/£6.35 billion) during 2020 due to such non-compliance. Due to this the local customs are under pressure to increase their day to day checks on parcels entering their country. In case of suspected under declaration of the goods, the parcel will get delayed, recipients are requested to handover documentation and are even requested to pay additional VAT & duties and sometimes even have to pay for the additional work.
Spring's advice to you
Research shows that trust is the key element in e-tailers building a loyal customer base which is happy to place repeat orders.
Transparency - both with tax and customs authorities and with consumers - is important in ensuring the kind of positive customer experience which creates trust.
In addition, providing accurate and complete information avoids delays and irritating recipients who might choose to make future purchases from your competitors rather than you.
Get ready for the first July 2021
The EU's new e-commerce rules come into force on the first of July 2021 and will see the VAT exemption for goods worth less than €22 ($26/£20) scrapped. VAT will be charged from the first cent of an item's value.
There are two options to settle VAT & duties:
The Duty At Place (DAP) method means that VAT & duties will be collected from the recipient by local customs. It’s to be expected that transit times will increase due to large amounts of packages that need to be customs cleared. Recipients not only have to pay the VAT and duties outstanding but, in some destinations, will need to be at home to do so. There may also be higher costs for the consumer due to higher customs clearance fees.
Delivered Duty Paid (DDP) offers recipients a much simpler experience at online checkout by charging tax and duties when they pay for their purchases. E-tailers can remit the correct VAT to the tax authorities in the country of destination via Import One-Stop-Shop (IOSS), applicable for goods worth up to €150 ($181/£135) or VAT and duties via a local clearance agent. Spring will be ready to handle your shipments that need the IOSS clearance method per the first of July 2021.
The Spring solution
Spring has many years of experience in helping e-tailers ship their packages without a problem to recipients worldwide.
Present in 16 different countries and services to more than 190 territories across the globe, we help make VAT and duties straightforward for hundreds of brands.
We can do the same for you too. All you have to do is contact your local Spring account manager.
We are Spring. We listen, we inspire, we deliver.