May 2023 update: The EC has proposed ending the €150 VAT threshold on consignment stocks from March 2028.
On 1 July 2021, the EU e-commerce package introduced the obligation to charge sales VAT at the point-of-sale on sales of goods consignments with an intrinsic value not exceeding €150. Such sales can now be reported via the Import One-Stop Shop IOSS return by sellers or deemed supplier marketplaces, of left to the Special Arrangements option.
The July 2021 changes replaced the liability to pay VAT on import. The €22 import VAT exemption was withdrawn. Consignments above €150 remained liable to import VAT at customs clearance.
But how to calculate the €150 value? VAT Calc’s in real-time global Calculator and Auditor services produce instant and accurate tax calculations for the EU commerce package changes, as well are our Filer produce automatic OSS or IOSS returns from the shared transactions.
Why €150 import VAT threshold? How to know if VAT due in the checkout?
Firstly, why did the EU pick €150 as new threshold for point-of-sale import VAT? This was because it is the Customs tariffs liabilities. Since Customs are now administering the Green Channel import process of IOSS sales, it was important for efficiency reasons that this was syncronised to Customs own work, thresholds and operational methods.
What costs are included in Intrinsic value €150 calculation?
To calculate to intrinsic value of goods, the following should be included:
- Cost of the goods;
- Transport, handling and insurance costs; and
- Customs Duties, which use the sum of the amounts in 1. and 2. above (Note, since €150 is also the customs tariffs duties threshold, then customs duties shouldn’t be incurred).
Consignments and multiple goods over €150
It is important to note that the €150 is based on the intrinsic value of each single consignement that clears through Customs. Costs are not broken out per item in the single consignment. So if three items are shipped within the same consignment valued at €100 + €35 + €20 = €155, then this would exceed the €150 threshold. VAT should not be charged at the checkout online. Instead, it is due at Customs clearance as previously.
Double tax issue? What if sellers or marketplaces don’t know value at time of sale?
A major issue for the new €150 consignment threshold is that sellers or marketplaces may not know how multiple sales of goods to a single consumer will be packaged and sent through Customs. They may not be able to accurately calculate the €150 intrinsic value. This could mean a seller or marketplace charging VAT at the checkout, the goods then being sent in a consignment exceeding €150 which triggers Customs charging import VAT. Double taxation.
In this case, sellers and marketplaces may reclaim from the relevant Customs the sales VAT incorrectly charged in their checkouts.
In either case, it is important for sellers and marketplaces to follow IOSS and OSS record-keeping obligations to support their decisions.