As of July 1, 2021, the European Union (EU) and the United Kingdom (UK) have begun charging VAT (Value Added Tax) on packages entering their countries, with no more tax exemption for low-value items. Due to these policy changes, all products included in international packages designated for the EU & UK are now subject to VAT.
To comply with these regulations, sellers need to register for the Import One Stop Shop (IOSS) for EU Sales or UK VAT Number for UK Sales and include the IOSS Number/ UK VAT Number on packages and shipping labels.
Failure to comply with these regulations can lead to several issues, both for sellers and their customers:
Customs Delays: Packages without the correct VAT details could be held up at customs. This can significantly delay delivery times, frustrating your customers.
Unexpected Fees for Customers: If the package doesn’t include the required VAT information, the recipient may be forced to pay VAT and additional handling fees when receiving their order. This could lead to negative customer experiences and even refused packages.
Increased Returns: Customers may refuse to accept their packages due to unexpected VAT charges, leading to an increase in returns and loss of revenue.