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Forbes
10 hours ago
- Business
- Forbes
New EU VAT Rules For E-Commerce Imports Take Effect In 2028
Shopping online concept Starting July 1, 2028, new VAT rules will apply to e-commerce imports into the European Union. E-commerce sellers and platforms handling online sales will be responsible for collecting VAT on imported goods and can no longer shift this obligation to customers. This change follows a directive adopted by the EU's Council of Finance Ministers (ECOFIN) on July 18, 2025. It represents a significant change from how VAT is currently collected on cross-border e-commerce. To understand the impact, it's helpful to look at how the current system works and why the EU wants to change it. How VAT on Imported Goods Works Today Right now, when a business outside the EU sells goods to a customer within the EU, VAT is due. This applies regardless of the value of the goods. Unlike customs duties, which apply only to shipments worth more than €150, VAT applies to all commercial imports. VAT can be collected at two points. The first is at the time of import, which is the default method for most shipments. VAT is charged when goods enter EU territory and are cleared for free circulation. The person responsible for paying import VAT is the one presenting the goods to customs—this can be the seller or the carrier. VAT registration is not required just to pay import VAT. However, registering may be useful if the importer wants to deduct that VAT as input tax later. The second method, introduced in 2021, applies only to low-value consignments—goods worth €150 or less, excluding items such as alcohol and tobacco. For these shipments, sellers can choose to collect VAT at the point of sale instead of at the border. To do this, the seller must register for the Import One-Stop Shop (IOSS). VAT is then remitted to a single EU country where the seller is registered. Under IOSS, import VAT is waived, which allows goods to clear customs more quickly. However, IOSS is optional. If a seller chooses not to use IOSS and the goods are valued at €150 or less, another special regime may apply. In this case, postal operators or express couriers can pay the import VAT on behalf of the customer and collect it at the time of delivery. This means that most sellers can decide how to handle VAT on low-value shipments. Some register for IOSS. Others rely on couriers to collect VAT from the customer. If none of these special regimes is used, the default rules apply, and import VAT is due when the goods enter EU customs territory and are released for free circulation. Delivery Options for E-Commerce Sellers Shipping to the EU How do these VAT rules work in practice? For non-EU sellers shipping goods to EU customers, there are three common delivery methods. One widely used option is DDP, or Delivered Duty Paid. Under DDP, the seller is responsible for all import charges, including VAT, customs duties, and clearance fees. These costs can be estimated in advance and included in the checkout price, so the customer pays everything upfront. After the sale, the seller forwards the estimated amounts to the carrier, who manages the entire import process. The carrier handles customs formalities, pays the import VAT, and clears the goods. In this arrangement, the carrier is treated as the importer of record, which means the seller does not need to register for VAT in the EU. DDP helps avoid unexpected charges at delivery, making it a popular choice for businesses that want to offer a smooth and transparent customer experience. Another option is IOSS. If a seller chooses this route, they must register for an EU IOSS VAT number, collect VAT at checkout, and submit monthly VAT returns to the country where they're registered. This allows goods to clear customs without paying import VAT. IOSS is only available for goods valued at €150 or less. It can be a cost-effective solution for sellers handling large volumes, but it often requires appointing an intermediary in the EU, which adds administrative complexity and expense. The third method is to shift responsibility for the import to the customer. In this case, the carrier pays the import VAT on the customer's behalf and collects it from them before delivery. This approach is simpler for the seller, as it avoids any VAT registration requirements in the EU. However, it often leads to poor customer experiences, especially if buyers weren't expecting to pay anything beyond the checkout price. Why the EU Is Changing VAT Rules for Imports The EU has acknowledged that the current VAT system for imported goods is complex and inconsistent. Sellers must choose between multiple schemes, each with different rules, costs, and obligations. The €150 threshold limits the usefulness of IOSS, and allowing sellers to shift VAT collection to customers creates delays and a poor delivery experience. As part of a broader Customs Reform—still to be finalized—the EU aims to simplify rules and tighten enforcement. Proposed changes under this reform include eliminating the €150 customs duty exemption for low-value goods, introducing a simplified tariff regime for such consignments, and expanding the IOSS to cover all goods, regardless of their value. Additionally, the reform would make online platforms the deemed importer, holding them responsible for collecting both VAT and customs duties at the point of sale. However, the most immediate and concrete change is a separate directive adopted by ECOFIN on July 18. It focuses specifically on VAT for low-value business-to-consumer (B2C) goods imported into the EU and will take effect on July 1, 2028. What Changes in 2028 and What Sellers Must Do Under the new law, the seller or the platform facilitating the sale will be responsible for paying VAT in the country where the goods are imported. The option to let postal services or couriers collect VAT on the customer's behalf will no longer exist. Sellers will no longer be able to shift this responsibility to the buyer. To avoid dealing with import VAT at the border, sellers will need to use the IOSS system. If they choose not to use IOSS, they must register for VAT in every EU country where they have customers and goods are delivered. In addition, they'll be required to appoint a tax representative in each of those countries unless their home country has a mutual assistance agreement with the EU—such as the UK or Norway. Without VAT registration or payment, goods will not be cleared by EU customs. In rare cases, EU countries may allow the customer to pay import VAT as a fallback, but this will only apply if explicitly permitted by the Member State—and only in exceptional situations. Why IOSS Will Become the Default Option for Most Sellers The new rules do not change how IOSS works, nor do they fix its current weaknesses. Although the system still has gaps, it will become the only cost-effective way to comply with EU VAT rules on low-value imports. While IOSS remains optional in law, the new framework effectively forces most non-EU sellers to use it. Alternatives will involve multiple VAT registrations, the appointment of local representatives, and significant administrative costs. The businesses most affected will be those that sell low-value goods to EU customers and have, until now, avoided VAT obligations by using courier-based collection or other workarounds. From July 2028, these sellers will need to rethink their strategy for EU e-commerce sales. The opinions expressed in this article are those of the author and do not necessarily reflect the views of any organizations with which the author is affiliated.
NHK
2 days ago
- Business
- NHK
G20 finance chiefs point to rising economic uncertainty
Finance ministers and central bank chiefs from the Group of 20 nations have wrapped up two days of talks in South Africa. They point to rising tensions over trade, but stopped short of directly mentioning sweeping US tariffs. The meeting came after US President Donald Trump announced plans to hit a host of countries with higher levies. The G20 issued a communique on Friday. It says the global economy faces complex challenges that pose a risk to growth and stability. Unlike previous statements, it does not refer to resisting protectionism. Japanese Finance Minister Kato Katsunobu told reporters that the joint communique underscores the G20's commitment to addressing challenges together. Some economic observers say new US tariffs could sow confusion in global supply chains, raising the need for coordinated measures from the G20 and other international frameworks.
Reuters
4 days ago
- Business
- Reuters
Germany to contribute 10 mln eur to World Bank trust fund, finmin says
DURBAN, South Africa, July 17 (Reuters) - Germany will provide an initial contribution of 10 million euros ($11.59 million) to the World Bank trust fund this year with the support of the Compact with Africa, German Finance Minister Lars Klingbeil said on Thursday. "We are convinced that this is a worthwhile investment and we will be very pleased to see other G20 members join us," he said in Durban, South Africa. The Durban gathering of finance chiefs on Thursday and Friday unfolds against the backdrop of mounting economic pressures, particularly for African economies. ($1 = 0.8631 euros)
Times of Oman
08-07-2025
- Business
- Times of Oman
Nirmala Sitharaman highlights India's strong economic resilience at BRICS
Rio de Janeiro: Speaking at the BRICS Finance Minister and Central Bank Governors meeting, Finance Minister Nirmala Sitharaman highlighted India's demonstrated resilience through a combination of strong domestic demand, prudent macroeconomic management, and targeted fiscal measures. The finance minister, as part of her intervention at the meeting, said that India's policy response to trade and financial restrictions has focused on diversifying markets, promoting infrastructure-led growth, and implementing structural reforms aimed at boosting competitiveness and productivity. The Union Finance Minister underlined India's view that BRICS is a vital platform for advancing inclusive multilateralism, especially when global institutions are facing a crisis of legitimacy and representation -- BRICS must lead by example by reinforcing cooperation, advocating credible reforms, and amplifying the voice of the Global South. Finance Minister Sitharaman also said that while South-South cooperation remains vital in advancing climate and development goals, the Global South should not be expected to carry the main burden of climate action, and BRICS countries are well placed to deepen cooperation on sustainable development. According to the joint statement put out on Sunday, hours before the Summit, the Finance Ministers and Central Bank Governors of the BRICS countries have called on advanced economies and the international financial system to provide "substantial" finance for climate mitigation in developing economies. "...We call on advanced economies and other relevant actors in the international financial system as well as the private sector to provide substantial finance for climate actions in developing countries, including by expanding concessional finance and increasing private capital mobilisation," the joint statement read. "Given the significant adaptation needs of EMDEs (Emerging Market and Developing Economies), we call on international financial institutions to scale up support for adaptation and to help create an enabling environment that encourages greater private sector participation in mitigation efforts," the joint statement continued. India, a BRICS member, has always been vocal about climate finance arrangements, primarily from the developed countries that are huge carbon emitters. India continued to be vocal about the need for adequate finance, particularly for the Global South. Climate finance typically refers to any financing that seeks to support mitigation and adaptation actions that will address climate change. Developing countries have been of the view that developed nations bear a greater historical responsibility for emissions and should take the lead in mitigation and finance. Finance Ministers and Central Bank Governors of the BRICS countries had gathered in Rio de Janeiro, Brazil, on July 5, 2025, under the theme "Strengthening Global South Cooperation for More Inclusive and Sustainable Governance".
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Business Standard
08-07-2025
- Business
- Business Standard
Trump believes BRICS seeking to 'undermine' US interests: White House
President Donald Trump believes BRICS is seeking to "undermine" the interests of the United States, and he intends to ensure that America is fairly treated on the world stage, the White House stated. While addressing a press briefing on Monday (local time), Press Secretary Karoline Leavitt stated that Trump will take any necessary action to prevent nations from taking "advantage of the US" and its people. "The president feels, generally speaking, that BRICS is seeking to undermine the interests of the United States. It's the president's utmost responsibility to put the interests of the United States first. That's how he views his job as president. So, he's going to ensure that America is fairly treated on the world stage, and he'll take any action necessary to prevent countries from taking advantage of the United States and our people." She stated that Trump is "closely monitoring" the BRICS Summit, and he perceives these nations as trying to undermine the US interests. The 17th BRICS Summit, hosted by Brazil in Rio de Janeiro on July 6-7, brought together leaders from Brazil, Russia, India, China, South Africa, and new members Egypt, Ethiopia, Iran, the UAE, and Indonesia for the meeting. "He's closely monitoring it (BRICS Summit), which is why he put out a statement himself. He does not perceive these countries as growing stronger. He just perceives them as trying to undermine the United States' interests. And that's not okay with him. No matter how strong or weak a country may be." Her remarks come after Trump issued a strong warning to countries supporting what he termed the anti-American policies of BRICS. In a post shared on Truth Social, Trump stated that any country aligning itself with the "Anti-American policies of BRICS" will face an additional 10 per cent tariff on goods. "Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy. Thank you for your attention to this matter," Trump posted on Truth Social. Trump's statement signals a hard stance from the US administration against what it sees as growing opposition from BRICS nations. The response came after the joint statement of the Finance Ministers and Central Bank Governors (FMCBG) Meeting of BRICS nations voiced opposition to the unilateral imposition of trade and finance-related actions, including the raising of tariffs and non-tariff measures. The statement stated, "We voiced our serious concerns with the unilateral imposition of trade and finance-related actions, including the raising of tariffs and non-tariff measures which distort trade and are inconsistent with World Trade Organisation (WTO) rules." The statement further adds that "In this testing environment, BRICS members have demonstrated resilience and will continue to cooperate among themselves and with other countries to safeguard and strengthen the non-discriminatory, open, fair, inclusive, equitable, transparent, and rules-based multilateral trading system with the WTO at its core, avoiding trade wars that could plunge the global economy into recession or further prolong subdued growth". Altogether, BRICS nations--Brazil, Russia, India, China, and South Africa, as well as many other developing nations that have joined BRICS over the last few years --account for nearly half of the world's population and about 40 per cent of the global GDP. The BRICS group now accounts for approximately a quarter of global trade and investment flows. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
