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Czech News in English » Business » Finance » VAT free packages from outside the EU ending this year

VAT free packages from outside the EU ending this year

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It looks as though this will be the last year one can order goods directly via global internet portals like AliExpress or Amazon USA, from the warehouse to one’s doorstep, without paying VAT. The current EU law, enacted in 2017 as a response to the dramatic increase of direct purchases via internet portals, states that packages with values up to 22 euro are free from VAT. At the end of 2020 the provision expires and countries will now request customs declarations and payment of VAT for each package from each person. In addition to the VAT, there are also administration costs to be considered.

Naturally the operators of the portals are searching for solutions. Many international distributors like Amazon already have shops, warehouses and staff in the EU. Packages coming from inside the EU are charged VAT rates according to the country they are shipped from. As is the case now, there will be no need to worry about any charges or paperwork to fill out. AliExpress is also building a warehouse outside of Prague, but the prices will be higher as one needs to consider the costs associated with running a warehouse and then the VAT on top.

For business nothing will change as one can still order larger volumes directly from China for example, fill out the declaration, pay VAT, and then deduct against the paid amount the amount the business collects from sales.

In all, the law changes the competitive landscape of the European VAT scheme. Rather than favoring sales of packages up to 22 euro outside the EU, everyone will be responsible to pay VAT for that which they consume in the EU.

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