Among the key issues confronting e-commerce parcels being shipping cross border has been how to minimize, access and pay duty fees. But with higher duty free thresholds, lower duty rates over all, the key concern is now payment of Value Added Tax.
Value Added Tax for Parcel Imports Explained:
Many in North America are not entirely familiar with the idea of a value added tax (VAT). Value added taxes can also be called Goods and Services Tax/ General Sales Tax/ GST. In general, most are familiar with having to assess and pay local and state sales taxes. The key difference between sales tax and VAT are:
- Value Added Taxes are typically assessed at a national (versus a state or locality) level.
- VAT is collected by sellers at each stage in the supply chain or manufacture
- VAT paid by a business can often be claimed back if it part of the the supply chain
- VAT must be paid by the final consumer
Sales tax is collected by the retailer when sold to the final consumer. VAT/ GST and other national tax regimes is collected by all sellers in each stage production or supply chain. Suppliers, manufacturers, distributors, and retailers all collect VAT on taxable sales.
Businesses can often claim back VAT if the amount paid is a necessary part for producing the final product.
Duty Free Thresholds for e-commerce orders
E-commerce orders to some countries benefit from duty free thresholds under which the goods can be imported duty free. But payment of value added tax / general services tax must be paid at time of import.
Significant Duty Free Thresholds for e-commerce orders:
- UK: £150 pounds
- European Union: €150 Euros
- USA: $800 USD
- Australia $1,000 AUS
Value Added Taxes for e-commerce imports
- UK: 20%
- European Union:
- Austria: 20%
- Belgium: 21%
- Denmark: 25%
- France: 20%
- Germany: 19%
- Italy: 22%
- Netherlands: 21%
- Portugal: 23%
- Spain: 21
- USA: No Federal Sales Tax/ VAT
- Australia: 10%
Prepayment of Value Added Tax for Online Orders
It is best for online sellers to calculate and charge applicable VAT at time of checkout. And, the cases of UK, EU and other countries, collection of VAT by the online platform is required. Jet Worldwide is building integrated shipping solutions from Canada and the USA to the UK, Europe, Japan, China, Caribbean and all major world economies.
Learn more from Jet's Logistics Experts :
- Understanding key concepts for shipping from Canada
- Understanding key concepts for shipping to Canada
- Prepayment of UK VAT when shipping online orders to the UK
- Prepayment of Value Added Tax to European Union Countries
- Understanding Benefits of the "new NAFTA" USMCA/ CUSMA
- Request a call back for your business shipping from Jet's logistics support team
Disclaimer: The information in this blog is for general information only. Producers, shippers, exporters, importers should confirm their processes with their customs brokers, carriers and regulating authorities.