From now on, shopping on AliExpress or Shein will no longer be cheap. From July 1 this year, the e-commerce VAT increase took effect, and goods worth up to 150 euros will be subject to VAT IVA. Previously, products from outside the EU costing less than €22 were exempt from VAT, while those costing between €22 and €150 were exempt from IVA if they paid a 21% duty. The new rule simply removes that exemption.
Luis Garcia Langa, the director of Corredordefondos.com, explained to reporters, "The first effect is that the increased costs are passed on to consumers: the margins are so low that the online stores have little capacity to absorb the costs."
"Unfortunately for local businesses, e-commerce is increasingly being used for home purchases. Clearly, the main factor in this choice is price, "Warns Mr Langa." In fact, it is too early to say whether the new 21% VAT will dampen online consumption."
"Who buys online? Except for those who are too lazy to go to the store, it is because the price is low, and the demand is very flexible and easy to operate. Even though, in many cases, people buy things cheaply and don't end up using them (which is also a problem in our society). So it is likely that purchases will decline, but whether that trend will change is not known, "he added.
Are AliExpress ready?
The law's coming into force had been announced for months. As a result, AliExpress and other well-known online stores have long been prepared. This can be seen on their website.
AliExpress chose to keep the display price unchanged on the web page and only increase the price once it reaches the shopping cart. At the time of payment, merchants display VAT with price details such as discount codes and shipping charges.
There is a question mark icon next to the VAT to show the explanatory information:
"From 1 July 2021, AliExpress is required to charge VAT on the sale of goods delivered to consumers in the eu. This will apply in two cases: 1) when the value of goods in the same order is less than or equal to eur 150 and the order is shipped from outside the EU; 2) Goods are shipped from eu member States, but the seller belongs to a country or region outside the EU, regardless of the order price. For more information, see our help center."
What rules have changed?
Tax authorities in several EU member states have been working for years to achieve tax balance, with one of the main objectives being to improve the terms of VAT for cross-border operations and online transactions within the EU. For this reason, the Spanish Government, in accordance with directives 2017/2455 and 2019/1995, approved Royal Decree 7/2021, by which VAT taxes on final consumer sales in the EU are modified.
The new rules focus on taxes on goods sold online. Generally, consumers from EU member states do not have to consider tax issues in the sending country. After the new law:
1. With effect from 1 July 2021, VaDIB goods will be subject to VAT in the home country of the final consumer.
2. A tax gradient of 10,000 euros per year has been established, and companies exceeding this sales figure will pay VAT in the consuming country. Below this threshold, the rate of origin continues to be applied.
3. VAT collected from other EU countries will be collected in a quarterly tax model (Model 368) under a one-stop system of the Spanish Ministry of Finance (OSS "One-stop Service") and will be transferred from the VAT collected from this third EU country to the corresponding tax authorities.
4. The original threshold for cross-border sales within the EU has been lifted, including the limit of 35,000 Euros for Spain.
5. The aforementioned 'one-stop shop' system also applies to goods sold online from outside the EU with a value of up to €150. In this case, the supplier must collect VAT from the country/region where the consumer is located and imports will be exempt from VAT.
6. On the other hand, the exemption on imports of goods not exceeding 22 euros was abolished, and these imported goods must also pay import VAT.
2/12/2022 01:00:00 AM
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