As from July 1, all goods imported into EU will be subject to VAT regardless of their value
Consumers who shop online have an infinite choice from the convenience of their own home. So it is no surprise that eCommerce continues to gain increasing popularity. But despite the indisputable benefits of online shopping, consumers must still be vigilant, and before purchasing goods imported from outside the EU they should make sure they are provided with all the relevant information.
In the first instance, consumers should make sure they have the seller’s complete contact information. They should check that the products ordered comply with the applicable European legislation in terms of safety. Consumers should also verify that the seller has provided them with all the required information vis-à-vis any applicable taxes or charges, thus avoiding any unpleasant surprises.
As from Thursday, July 1, any postal items imported from outside the EU, including purchases from the UK, need to undergo clearance from the customs office. This may require the payment of import taxes, including value added tax (VAT), customs duty and excise duty.
Up until now, goods imported into the EU of a value less than €22 were exempted from VAT. However, this will change, because as from July 1 all goods imported into the EU, regardless their value, will be subject to VAT. These import taxes will also have to be paid for goods ordered before July 1 but imported or delivered on or after this date.
As a consumer, you should also be aware that when buying non-EU goods of a value not exceeding €150, the price you pay online will be inclusive of import taxes. This is because as from July 1, VAT will be charged directly by the seller (or the intermediary) upon the conclusion of the online sales transaction.
This means there will be no extra VAT charges by customs at the point of importation. However, this only applies if the seller is registered under the new VAT system and the import one-stop shop (IOSS) scheme. If the seller is not registered in the IOSS, customers have to pay the VAT and possibly other postal/carrier processing fees and/or clearance charges when goods are imported into the EU.
Since different conditions apply on the applicability of these taxes, consumers are advised to refer any queries on such matters to the Department of Customs before purchasing an item from abroad so as to obtain the most accurate and relevant information. The customs department may be contacted via e-mail malta.customs@gov.mt and on tel. 2568 5121.
It is also important that consumers are aware that they may incur additional costs in connection to the handling and clearance of parcels received from outside the EU. These fees may vary depending on the courier company or postal operator providing the customs clearance and delivery service. Therefore, consumers are advised to check these costs before concluding the online purchase.
When shopping online consumers should not only consider the cost of the product they intend to buy but also other compulsory charges, such as any applicable taxes, postage fees and delivery costs.
The new EU VAT rules were developed to ensure that goods imported from outside the EU no longer have a preferential VAT treatment compared to goods purchased from within the EU. Therefore, the new rules will create fairer taxation and a simpler process for businesses to declare and pay VAT.
Undoubtedly, online shopping offers a myriad of benefits to consumers, including a wider selection of products at potentially cheaper prices, and all this from the comfort of their own home. However, for consumers to really benefit from this shopping tool, they need to be fully aware about all the costs involved in connection to their purchase. In view of this, consumers should therefore take note that as from July 1, 2021, all purchases made from a non-EU country, regardless their value, will be subject to VAT.
This information is provided in collaboration with the Malta Communications Authority as part of its endeavours to educate consumers on their rights when making online purchase decisions, particularly in light of the new EU VAT eCommerce rules coming into effect on July 1, 2021.
Odette Vella, Director, Information and Research Directorate