What are the proposed changes?

The proposed changes are summarized below:

  1. Suppliers and marketplaces will be liable for VAT on the import and sale of the Low Value Consignments in the EU destination country, unless they use the IOSS. The proposal also covers situations where the import is made on behalf of the consumer. Not using the IOSS will in principle result in VAT (registration) obligations in all EU destination countries for the suppliers and marketplaces.

    If the IOSS is used, the import will be VAT exempt and VAT will be due on the sale of the goods by the (deemed) supplier in the destination country. The (deemed) supplier can declare these VAT amounts in the country of the IOSS filing (single return and payment for all EU countries).

  2. Suppliers and marketplaces that are established outside the EU and that are liable for EU VAT on Low Value Consignments will in principle be required to appoint a tax representative. Under the current rules, non-EU (deemed) suppliers already have to appoint an intermediary to use the IOSS.

  3. In situations where the IOSS is not used and the import VAT obligations are not duly complied with, the goods will not be released for free circulation. For such situations, the proposal includes an option for the consumer to pay the import VAT as a fallback option.

  4. The proposal enables EU countries to make customs representatives who do not act as a tax representative and other persons jointly and severally liable for the import VAT. This relates, for example, to persons that are (also) liable to pay the customs debt in case of customs irregularities.

  5. The existing special arrangement for customs declarants (like postal operators and carriers) that import Low Value Consignments on behalf of consumers will be abolished. This postal and courier arrangement was introduced on 1 July 2021, but does not align with the intention to shift VAT liabilities to suppliers and marketplaces.

Our thoughts

The proposed changes fit in a broader trend whereby the burden of VAT collection is shifted to tax-compliant sellers and marketplaces. This trend of increased tax obligations for marketplaces is not limited to VAT. For example, the Customs Reform proposal includes a plan to make marketplaces liable for customs duties and to abolish the current EUR 150 threshold for Low Value Consignments. We refer to our earlier website post regarding this topic.

Please contact our dedicated VAT specialists for advice on your situation.