VAT rules: EU changes taxation of goods sold over the Internet

If your company sells products on the internet, you need to be aware of the new VAT rules on online purchases. This is because a change in the taxation of goods sold over the internet to consumers in the 27 countries of the European Union (EU), including Brazil, has recently come into effect.

The major news that promises to affect e-commerce worldwide is that all goods sold virtually to European consumers will now have to pay Value Added Tax (VAT). The reason for these changes in the VAT rules was the fraud that had been taking place under the previous format. 

The rules, until then, exempted products with sales values of up to 22 euros from taxes. However, cases were found in which smartphones and other high-value products were being declared exempt from VAT.

VAT Rules: What does this acronym stand for?

In objective terms, Value Added Tax (VAT) is a unified tax, which aims to eliminate various taxes currently levied. Among them are federal, state, and municipal. They are Tax on Industrialized Products (IPI), Social Integration Program (PIS), Contribution for the Financing of Social Security (Cofins), Tax on Operations Related to the Circulation of Goods and Services (ICMS) and Tax on Services (ISS). 

For being taxes with rules considered bureaucratic, since they presented different rates according to the product and various regimes, the idea of the new VAT rules is to simplify this system. Thus, with less complex processes, this is expected to influence the efficiency of services.

How do the VAT rules affect e-commerce?

With the new VAT rules, an online portal called Import One Stop Shop, or IOSS, goes live to make it easier for traders worldwide with closed sales to consumers in countries within the bloc to declare VAT.

An example of how the new VAT rules will work is that, for those who reside in a European Union country and bought goods from outside the block (from a Brazilian e-commerce, for example), the new taxation puts an end to a recurring and inconvenient problem: seeing the package held up at customs due to doubts from the Revenue Service as to the rates of that merchandise.

In addition, it was common to find European consumers having to pay an import tax on these products to clear them through customs. An inconvenience also faced by many Brazilians who bought products from foreign marketplaces.

And if before, each country had a different system for commercial transaction, generating delays in the packaging of products to European consumers, with the new VAT rules, the payment system in the European Union now standardizes the requirements on the commercial transaction data to be registered by the seller. 

So you can see that the new VAT rules for e-commerce have come about with the purpose of making life simpler and fairer for everyone. Therefore, an online portal has been developed by the European Union Commission to help traders who need more information about the VAT rules. Click here and stay tuned!

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We offer a fully online service with competitive prices that make it possible to ship Brazilian products to anywhere in the world without the need to go to the post office and with the calculation of taxes included.
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