European countries are implementing rules that make importing ecommerce more clear and consistent across all countries. For orders less than €150 (around CA $220), it is mandated that VAT be collected at point of check out. The goods can then be cleared using streamlined "green channel" for faster clearance and - most important for ecommerce sellers - no consignee fees.
Canadian sellers will be expected to charge the VAT applicable to EU country of residence of their customer (using the delivery address of the customer). This requirement may be done by a marketplace, such as eBay, or directly by the seller.
Complicating requirement of collecting VAT upfront but the processes overall are much more streamlined as it relates to customs clearance and elimination of consignee import fees.
Green Channel Import and IOSS import VAT simplified reporting
IOSS will be a quarterly filing submitted to a tax authority in the same format as the VAT OSS. IOSS allows Canadian sellers to register in on EU country and sell across the entire EU: One set of reporting and one consolidated payment.
Summary of Changes of VAT Rules for Imports to the European Union:
1. EU VAT Rule Changes are Effective July 1, 2021
All goods imported to the EU will be subject to VAT on July 1. Currently, goods valued under €22 can be imported duty free and without VAT.
2. Introduction of IOSS Processes and portal
Import One-Stop Shop: E-commerce shipments valued under EUR 150 can be imported via One-Stop Shop (IOSS) processes that allow sellers and online marketplaces to charge VAT at the point of sale and remit it directly to the authorities.
- If the IOSS is not used, the VAT will be charged to ecommerce customers by the importing carrier (plus an administrative/ pre-payment fee).
The Canadian e-commerce businesses and marketplaces will be able to register for a VAT account in only one EU country. Currently, sellers have to register in each country they sell and ship to.
3. Collection of VAT from point of Sale by marketplaces and online sellers
Online marketplaces or direct to consumer (DTC) individual sellers (who do not use an online marketplace) are the responsible party for collecting VAT for orders up to €150.
- Online merchants using several marketplaces to should keep records of their sales corresponding to the IOSS number/ customs declarant used for the transaction.
4. The IOSS applies to online sales to all EU countries and Northern Ireland
EU countries include Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden. EU VAT rules for Northern Ireland are established in the EU-UK Joint Protocol.
5. Canadian companies and ecommerce sellers can access register via the IOSS portal of an EU Member.
Businesses not already established in the EU will likely need to appoint an EU-established intermediary to fulfill the VAT obligations.
For details on IOSS and the otherEU’s VAT rules, visit: Publications Office of the European Union.
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Shopify, e-Bay and Shipping Online Canadian Orders to Europe
Disclaimer: The information in this blog is for general information only and is not intended to, constitute legal and/or tax advice. Producers, shippers, exporters, importers should confirm their processes with their customs brokers, carriers and regulating authorities. All liability with respect to actions taken or not taken based on the contents of this site are hereby expressly disclaimed. The content on this posting is provided “as is”; no representations are made that the content is error-free.