EU VAT Changes Effective July 1, 2021

On July 1st, 2021, the European Union (EU) will implement changes to the value-added tax (VAT) rules.These changes could have significant supply chain impacts to B2C e-commerce sellers.

Passport is here to help!  Our new Seller of Record Solution will give brands continued access to the EU market, simplify shipment processing, reduce customs clearance times, and improve the delivery experience.

What’s Changing?

Orders with a value of €150 or less, shipping DDP: 

EU has set up a new simplified VAT clearance program. Shipments not registered and compliant with this new program will be subject to:

  • Delayed customs clearance (up to 2x slower)
  • Clearance requirements in each final destination country (vs. centralized)
  • Increased customs and brokerage fees
  • May not be able to claim  VAT refunds on returns or undeliverables
  • Ineligibility for reduced VAT rates for certain items

Abolishment of the €22 Import VAT Exemption for the EU. 

For DDU  shipments, this means: 

  • Significant increase in number of postal packages inspected at customs
  • Introduction of a new flat fee per shipment (estimated to be €5-15)
Who is Impacted?
  • At a high level, most eCommerce brands currently selling into the EU
 will be subject to these new regulations. More specifically: 
  • US sellers with no legal entity, no inventory in the EU
  • Total order value equal to or less than €150 (excluding transportation charges)
  • Goods not sold through a marketplace (e.g. Amazon, eBay)
  • Goods where VAT is charged when the order is placed

What are your options to
navigate these changes?

Passport’s EU VAT Seller of Record Solution

ONGOING
  • Use Passport’s EU VAT number without ever having to register
  • Passport collects, remits, and files VAT returns on your behalf
  • Reclaim VAT on returns and undeliverables
INITIAL SETUP
  • Download the Passport app
  • Follow easy steps to integrate VAT solution directly into your cart

Other ways to deal with EU VAT changes

Register for your own Import One Stop Shop (IOSS)

ONGOING
  • Monthly: reconcile and  report VAT to country of IOSS registration
  • Keep records of all eligible IOSS sales facilitated for 10 years
  • Estimated first year cost: over €5,000 
INITIAL SETUP
  • Find a fiscal intermediary in one of the 27 EU countries
  • Register for IOSS and wait to receive number
  • Provide IOSS number to carrier for each shipment

Register for VAT individually in every country you ship to

 ONGOING
  • Reconcile and report VAT to each country individually, and at varying intervals on a country by country basis
  • Estimated first year cost: over €215,000
INITIAL SETUP
  • Register for VAT # in every EU country
 you ship to
  • Navigate VAT registration networks in 
local languages
  • Find a fiscal representative for each country that requires one

Set up a legal entity
 in the EU

ONGOING
  • Monthly: reconcile and  report by country
  • Annual company meetings in country
  • Pay Corporate tax
INITIAL SETUP
  • Register to be an entity
  • Pay registration fees
  • Set up a local registered office
  • Have a director
  • Register for One Stop Shop (OSS)

Do Nothing

ONGOING
  • Higher transportation and brokerage costs
  • Longer transit times
  • Shipments must clear customs for each end consumer’s final destination country
INITIAL SETUP
  • Brands can still have the carrier or customer pay VAT on import, but there are significant negative supply chain impacts

We are ready to help!

Deal with EU VAT changes like it’s nothing! Our specialist will contact you shortly via email once the the form is submitted

Thank you for your interest in shipping with Passport! We'll be in touch with you soon.
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− Passport Shipping team