The European Commission recently put forward important proposals that will change the customs and value-added tax landscape. The proposals to reform the EU Customs Union will be implemented step-by-step starting in 2028. Other important EU VAT changes for platforms are proposed to enter into force in 2025.
The rapid growth of e-commerce has led to a boom in the number of small packages of low-value goods entering the EU, each of which, since 2021, needs an individual customs declaration. VAT is applicable on all imported goods, while parcels valued up to 150 euros ($165) are relieved from customs duties.
Currently platforms are only considered “deemed importers” if the goods valued under 150 euros are imported into the EU. Otherwise, EU consumers are considered the importers liable for payment of import VAT and customs duties due on the goods they have bought online.
Proposed E-Commerce Measures
Platforms will become deemed importers. From March 1, 2028, platforms—instead of EU consumers—will be responsible for ensuring that customs duties and VAT are paid on the sales facilitated by them when goods are imported into the EU. The VAT and duties become due when the platform receives the payment for the goods, and the platforms need to include the customs duties and import VAT in the price at the point of sale.
EU customers will thus have transparency on the full cost of their online purchase and will pay for it in one go instead of being faced with hidden charges when their parcel arrives.
VAT and customs become due by fiction if goods are already imported at moment of sale. Under current rules, a platform can become liable for VAT on the underlying sale if it’s considered the seller by a fiction—in other words, is a deemed supplier of the goods sold via its platform. If the VAT fiction applies, the platform is considered as acquiring the goods from the actual supplier and reselling them to the customer.
The VAT fiction or deeming provision makes the platform responsible for VAT collection on the supply to a customer even where contractually the platform isn’t a party to that supply. This fiction currently affects platforms which facilitate the sale of goods by non-EU businesses through their platform.
Customs duty relief will be removed. The current exemption from customs duty for goods valued at less than 150 euros will be abolished from March 1, 2028. From 2028, platforms will log their sales into the new centralized online system—EU Customs Hub—which will replace national systems over time and will allow simplified clearance. No declaration for each specific parcel will be required.
The current threshold of 150 euros for the import one-stop shop scheme will be eliminated. Currently, when the IOSS is opted for, the payable VAT is collected at the point of sale and paid via the IOSS to the member state where the customer is located. The IOSS is currently only available for sales of imported goods with a value not exceeding 150 euros. After the threshold is abolished, consignments with a value above this threshold can also be reported in the IOSS.
Simplified duty calculation for business-to-consumer sales. A simplified tariff treatment will be introduced for B2C sales of goods that are imported from 2028. The operator will be able to choose between the standard/preferential or a simplified duty calculation method. The latter will be based on a bucketing system with respective ad valorem duty rates for different goods.
The proposal foresees further simplifications relating to tariff classification, customs value, and origin, to determine the customs duty for B2C sales of imported goods. The simplified tariff treatment is to be applied on a voluntary basis by the deemed importer. If the deemed importer wishes to benefit from preferential tariff rates by proving the originating status of the goods, or from conventional or applicable lower autonomous duty rates, they can do so by applying the standard procedures.
The imported goods must comply with EU rules. To bring goods into free circulation, they must comply with the relevant EU legislation, such as various EU standards.
The special arrangements for postal carriers will be extended. The special arrangements allow couriers to declare and pay the collected VAT on a monthly basis for imports on behalf of their customers. Under this proposal the 150-euro threshold which currently applies to the special arrangements will be removed.
Planned Changes from 2025
From 2025, VAT in the Digital Age extends the VAT liability of platforms, which will be made liable for charging and remitting the VAT when they facilitate a business-to-consumer and business-to-business sale of goods from a location in the EU. The fiction applies for both domestic and cross-border sales within the EU irrespective of where the seller is established.
Another important change relevant for platforms concerns the IOSS. The IOSS was introduced as an optional scheme for facilitating marketplaces in July 2021 and is proposed to become mandatory from Jan. 1, 2025. The ViDA proposal makes the use of the IOSS mandatory for platforms facilitating low-value imports into the EU.
Next Steps
The European Parliament and national governments (the European Council) still need to approve the proposals. The new legislation is expected to come into effect in stages starting in 2025.
Importers, carriers and other actors should assess the potential impact of the proposed measures, and:
- Evaluate the effects of new obligations for platforms, such as deemed seller status in 2025 or deemed importer status from 2028.
- Evaluate the effects of the removal of the customs duty relief from 2028.
- Assess the benefits of the simplified duty calculation for B2C sales.
- Assess the correctness of their data.
- Evaluate the readiness of their systems to exchange data.
- Implement changes in their systems if necessary.
- (Further) automate their business processes.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
Author Information
Aiki Kuldkepp is senior manager, tax, with Grant Thornton Netherlands.
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