Retail: Online purchases from non-EU countries are sometimes becoming more expensive

Partly higher costs, but also no more nasty price surprises: New rules have been in effect since Thursday for online purchases from non-EU countries such as China or the USA.

Smaller goods with a value below the previous exemption limit of 22 euros will in future also be subject to sales tax, as the EU Commission announced in Brussels. At the same time, however, hidden additional costs are to be eliminated and transparency for customers increased.

Specifically, the new rules mean that in Germany, 19 percent VAT will be added to goods with a value of less than 22 euros, including books and groceries. For example, if a CD from a US mail order company previously cost 20 euros, taxes will be charged at 23.80 euros in the future. The actual duty, which is charged separately, continues to apply to goods with a value of 150 euros or more.

The new rules are also intended to provide better protection for customers from unpleasant surprises. Anyone who had previously ordered products from third countries had to expect extra costs for registration with customs by the transport company. This should be omitted with immediate effect and the stated price should also be the final price. In order to make it easier for companies to sell to other Member States, they can register on a portal that makes it easier for them to record and settle VAT.

With the new regulations, the EU wants to prevent retailers from non-EU countries from being able to undercut their local competitors. So far, traders based in the EU had to pay sales tax on all their goods, while the exemption limit of 22 euros applied to imports from third countries. “We think that consumers should accept the somewhat higher prices. Because they guarantee fair competition, ”comments the tax expert of the German Trade Association (HDE), Ralph Brügelmann.

However, the North Rhine-Westphalia consumer advice center knows that the import sales tax is not completely eliminated. As long as the amount of VAT to be paid is less than one euro, it will no longer be charged. Despite the new regulation, the consumer advocates are calling for information about the fees to be paid on the customs website before ordering.

In the past, the exemption limit was also misused for tax fraud. Some retailers labeled packages with a price of less than 22 euros, even though a much more expensive product was included. This means that VAT was not paid automatically. Customs only got hold of the machinations through controls. The EU Commission estimates the damage to the EU state coffers from such loopholes at seven billion euros annually.

In the future it should no longer be “someone declaring something as a baby monitor for fifteen euros and ultimately an I-Phone is in it,” says Brügelmann. But you also need more controls for that. The Federal Customs Directorate sees the obligation to register small consignments first and foremost plugging a loophole, “so far there has been no provision here, they just went through”. The data that are available as a result are also an advantage in the risk analysis: According to the information, the customs sample analyzes could be carried out in a more structured and targeted manner.

The EU also wants to ensure that taxes are paid at the point of delivery of the goods. From now on, an EU-wide threshold of 10,000 euros applies, above which retailers have to pay VAT. Until now, individual threshold values ​​had applied in every EU country. In future, the tax will only be settled with a tax office and distributed to the EU countries in which the dealer made sales.

Christoph Trautvetter from the “Network Tax Justice” describes this “one-stop-shop” rule as a simplification that also represents a potential risk. Sales taxes could then be declared in a country other than Germany, which does not check as carefully as in this country.

The scientist acknowledges Germany’s efforts to combat sales tax fraud, but this is not enough. He refers to a report by the Federal Court of Auditors from October 2020, which says: “Despite the efforts made by the legislature and the administration to combat fraud to date, no trend reversal has been identified”.

The industry association for online and mail order trade bevh calls the regulations “a step forward”. For consumers, “concrete comparability” will be created for prices. In addition, it would take some of the strain off national dealers in the international price war.

“Basically, this is a simplification, and we welcome this as a step in the right direction,” says Brügelmann. However, it is complicated to find out the applicable VAT rates for individual products. A uniform database is needed here. However, the trade association rejects uniform VAT rates across the EU.