The European Union announced that they plan on removing the exemption for imports of low value by 2021.
The exact amount of the threshold for imports of low value currently depends on the country where the import takes place, and is around US$25.
By and large, this exemption is the most popular way to forego import taxes (VAT and customs duties). Major e-retailers, particularly from the U.S. and China, but also from Switzerland, use this mechanism to import goods into the EU without paying any tax.
From my own experience, non-EU companies also use this exemption to bring bulk goods in an EU port, re-package the goods under customs bond, and then send small packages to individual buyers out of the bonded warehouse. On the small shipments out of the bonded warehouse no import taxes are due.
From 2021, these shippers must register for VAT in the country where the import takes place, and account for import VAT and customs duties at the time of import of the goods. Alternatively, they must let the customer import the goods. In both cases, the seller will want to know exactly the amount of the VAT and customs duties – either to calculate the final cost of the goods, or to communicate to the buyer that delivery can only take place if he pays amount x to the customs authorities.
By that time, it is likely that the seller must account for the VAT rate of the customer’s country. Importing the goods into a low-rate country (like Luxembourg) will probably not be helpful.
And err… by 2021 the UK will be well on its way to be a non-EU country. For UK based e-retailers the same rules will apply as for any non-EU seller.
More compliance and more calculations – add the upcoming, BEPS-inspired transparency rules (“SAF-T”) to this mix, and you will find out soon that data is king. Managing tax data will no longer be a nice-to-have element of your ERP implementation, but rather a strict requirement.
More here – with a hat-tip to Avalara: http://www.vatlive.com/vat-news/non-eu-e-retail-faces-40-eu-vat-customs-hikes/.