New EU Trade Regulations on July 1st. So what?
By Alexander Maasik
On July 1st, 2021, new EU trade regulations will completely change the way trade with the EU works. New requirements will impact sellers in both the EU itself and every seller in other countries who wishes to sell or deliver goods to customers in the EU.
A lot of people believe that this will not be a big issue. Trade will continue like it always has. Some think that maybe the new regulations will not go into effect at all (as they’ve been postponed before). For those people, we have bad news: new EU trade regulations will come and they will be enforced. And if you don’t comply, you will not be able to do successful business in the EU.
What will change for companies outside the EU?
Up until now, most of the consumer goods imported to the EU have not been declared in customs.
Most of them fell under the Low-Value Item Exemption. This exemption is being abolished. Meaning that all goods entering the EU must now be declared in customs and VAT needs to be paid for them by the seller. One must collect VAT on all goods they are selling to the EU at the point of sale. What’s more, the VAT rate is dependent on the country of destination. Sellers must therefore be able to determine the VAT rates of specific goods for all of the EU countries they want to deliver to.
To declare VAT and other duties, the EU is introducing the Import One Stop Shop (IOSS). IOSS allows businesses to collect, declare, and pay VAT on low-valued consignments (up to 150 euros in value) in one EU member state. This system replaces the current obligation to register in every country where one is selling goods in the EU.
What will happen to sellers in the EU?
Ecommerce sellers in the EU, whose annual revenue is more than 10 000 euros, must join the One-Stop Shop (OSS) scheme for declaring and paying VAT.
Using OSS, you can register in one EU member state and declare and pay VAT in that country. That allows one to avoid registration in each Member State where you are selling your goods to the customers.
Companies whose annual revenue is less than 10 000 euros, can also join the OSS. This makes declaring and paying VAT easier for them.
What happens if I don’t comply with the new regulations?
It is safe to say that the EU will start enforcing these rules very quickly. Sellers who hope to get past them will discover that their goods get stuck in customs and their customers will be unhappy.
Eurora Intelligent Cross Border Compliance Platform can handle all of these issues. Eurora is a cross-border compliance platform that was developed with just that goal. To fully automate all aspects of cross-border trade and to make shipping goods to any part of the world as easy as possible. Eurora’s fully automated and science-backed AI-based solutions allow companies to save time and resources while handling large amounts of data near-instantly and precisely.
For non-EU sellers, Eurora can also be the fiscal representative in the EU who manages and handles taxes and duties under the IOSS scheme. We are one of the first companies in the world to offer this service.
If a company also uses other Eurora services like the Duty & Tax Calculation or HS Code Allocation, our system can easily put together the VAT data needed for the IOSS. And also put together electronic declarations and deliver them to customs automatically.
Don’t hesitate to reach out if you wish to learn more about how to keep selling goods to the EU.