New EU VAT rules: the end of cheap pens from non-EU countries in the EU?

[mr T.]

As of 1 July 2021, new European VAT rules for online sales will apply. Imported goods from non-EU countries with a lower value than €22 are at the moment VAT-exempt. That rule will be abolished.  It also means that every package/order will be checked by postal operators or courier firms and that there will be additional handling costs. For pens that cost more than (the equivalent of) € 150,-, even additional import duties will be added. It seems as if these new rules are targeted mostly at sellers and shops from China.  At the moment it is possible to buy an pen with P&P for about € 2,- from places like AliExpress or Ebay. That same pen will cost in the near future € 2,- + VAT (where I live 21%) + handling costs (between € 13,- and € 18,-) = about € 21,- .  Are cheaper/lower end pens from, for example China or India, a thing of the past for buyers in the EU/EER area?

[Dione]

The new rules aren't targeted at sellers and stores from China. What they mean is that you will pay VAT on everything you receive from anywhere. Currently you only pay VAT on everything you receive from within the EU.

[BayesianPrior]

1 hour ago, mr T. said:

 It also means that every package/order will be checked by postal operators or courier firms and that there will be additional handling costs.

 

Are you sure that every package will be checked and subject to VAT and handling costs?  Or will it be like the current system in Canada/USA where a more proportionate approach is applied (i.e., it's a bit random and not every parcel is assessed an import tax, even high value parcels).

 

I can't see the economic case for collecting VAT on a €2 pen.  Surely the operational expense of opening each package, assessing the contents, filling in forms, resealing each package, etc. would far outweight any revenue for the respective country's treasury?

[mizgeorge]

27 minutes ago, BayesianPrior said:

 

Are you sure that every package will be checked and subject to VAT and handling costs?  Or will it be like the current system in Canada/USA where a more proportionate approach is applied (i.e., it's a bit random and not every parcel is assessed an import tax, even high value parcels).

 

I can't see the economic case for collecting VAT on a €2 pen.  Surely the operational expense of opening each package, assessing the contents, filling in forms, resealing each package, etc. would far outweight any revenue for the respective country's treasury?

You might think so, but the massive handling charges that are attached to the exercise are passed on to the customer. Plus, of course, it's a great way to stop people in the rest of the EU from buying from the UK (which I suspect is the real reason for doing it). 

 

It's an absolute kick in the teeth for the small businesses that these governments claim to encourage and support. Most will now only be able to realistically sell through channels that can collect tax for them (like ebay/amazon/etsy) and it discourages everyone from buying from overseas.

 

I have no problem with paying VAT (both as a buyer and seller), but I deeply resent the extortionate handling fees charged for collecting it, and firmly believe that it is a protectionist approach, which does nobody any good, especially at the lower ends of the scale.

[maclink]

Seems like in the EU, you will be better served confining low price purchases through bulk resellers within the EU.  This is a very interesting move if the handling charges will be as high as mentioned here.  

[BayesianPrior]

1 hour ago, mizgeorge said:

You might think so, but the massive handling charges that are attached to the exercise are passed on to the customer. Plus, of course, it's a great way to stop people in the rest of the EU from buying from the UK (which I suspect is the real reason for doing it). 

 

Ah I see, thank you.  The truth is I do not really understand the underlying cashflows, e.g. how handling fees are collected by the courier to offset the government's expenses in collecting the revenue.  I assumed that couriers kept these fees as pure profit, and the governments only received the tax or duty levied.

 

Quote

I have no problem with paying VAT (both as a buyer and seller), but I deeply resent the extortionate handling fees charged for collecting it, and firmly believe that it is a protectionist approach, which does nobody any good, especially at the lower ends of the scale.

 

Agreed.  To my mind, and in a theoretically pure scenario, tax is integral to the social contract.

 

Handling fees do not fund hospitals, schools, or even fill potholes!

[maclink]

17 minutes ago, BayesianPrior said:

Handling fees do not fund hospitals, schools, or even fill potholes!

 

It pays salaries and provides funding for the necessary infrastructure, equipment, consumables for the processing exercise... all in order to get that extra VAT.  A nice way of beefing up the civil service and provide gainful employment.  There's also the indirect benefit to those offered contracts to build/maintain said infrastructure/equipment and for those companies that sell/provide consumable.

 

All to meet the need to collect VAT on the considerable demand for overseas purchases and imports.  I think the EU economies are struggling and they are clamping down.  The UK may be a target, but it may well be secondary.

[Geert Jan]

On the risk of turning this into a political story... For the EU current situation: sales under €22 no VAT, over €22 VAT over €150 VAT and import duties. Currently the carriers handle this, and you pay a handling fee to the carrier. This is provided your package is picked out of the stream for this. From 1 July VAT is applicable to all sales, and import duties on sales over €150. Good news is that sellers can register for the EU Import one-stop shop (don't think the sellers will be happy about this), and they will handle the VAT, so no handling fees from the carries. The sellers could be individual sellers, but also online marketplaces Etsy, Aliexpress, probably eBay... If the seller doesn't register you still have to pay, but the handling fees might be lower (for me PostNL will reduce the fee from €16 to €4)

 

I don't think this is very much different from the setup of the UK treasury, where sellers from outside the UK selling to buyers inside the UK are required to handle UK VAT.

 

I leave it up to you if you want to see this as an unwanted tax burden, or a method to get a fairer competition between sellers inside the VAT territory and outside of it.

[Uncial]

I understood this as part of WTO rather than specifically EU and all part of the response from so much trade moving online during the pandemic.

[peterg]

I've bought a few pens from the EU through E-bay and the VAT is paid on the invoice with no additional handling fees in the UK.

 

Worked quite well (apart from the 20% surcharge).

[Dione]

1 hour ago, peterg said:

I've bought a few pens from the EU through E-bay and the VAT is paid on the invoice with no additional handling fees in the UK.

 

Worked quite well (apart from the 20% surcharge).

Yes that is how it works for EU to UK but the OP is asking about what happens when he receives items within the EU. There are notices on ebay now that every item mailed to the EU will require an IOSS number that cannot be added manually and needs to be added while pricing online mailing labels.

[maclink]

20 hours ago, Geert Jan said:

Good news is that sellers can register for the EU Import one-stop shop (don't think the sellers will be happy about this), and they will handle the VAT, so no handling fees from the carries.

But the EU import one-stop shop will have the burden of processing this new VAT. Will tax payers or the purchaser be burdened with a processing fee from EU customs rather than the carrier?

[mr T.]

On 6/15/2021 at 6:30 PM, Dione said:

The new rules aren't targeted at sellers and stores from China. What they mean is that you will pay VAT on everything you receive from anywhere. Currently you only pay VAT on everything you receive from within the EU.

Imported goods from non EU countries that are worth more than € 22,- are not exempt from VAT. There will be even VAT calculated over the cost of P&P and insurance if the imported goods are worth more than € 22,- Most pens that are imported into the EU from, for example, Japan or the US generally cost more than € 22,-  Most cheaper pens (and business to consumer products in general) that are imported into the EU are from China. 

 

On 6/15/2021 at 7:25 PM, BayesianPrior said:

 

Are you sure that every package will be checked and subject to VAT and handling costs?  Or will it be like the current system in Canada/USA where a more proportionate approach is applied (i.e., it's a bit random and not every parcel is assessed an import tax, even high value parcels).

 

I can't see the economic case for collecting VAT on a €2 pen.  Surely the operational expense of opening each package, assessing the contents, filling in forms, resealing each package, etc. would far outweight any revenue for the respective country's treasury?

Where I live, almost all the checks and handling will be done by the postal and parcel services and they collect the VAT and charge a handling fee for it.  And also: a description of the product inside the package and it's value has to be written on the outside of the package, so it will probably not to be that difficult to charge the handling fee and collect taxes and duties in most cases.

On 6/15/2021 at 8:16 PM, maclink said:

Seems like in the EU, you will be better served confining low price purchases through bulk resellers within the EU.  This is a very interesting move if the handling charges will be as high as mentioned here.  

Some online sellers/platforms from China already have warehouses or fullfilment centres in the EU. Goods that are shipped from these places are in general much more expensive than the same goods shipped directly from China and choice is, compared to what is offered directly from China, quite poor.  For those that are interested in cheap/low end pens it always means higher prices. 

 

On 6/15/2021 at 10:10 PM, Geert Jan said:

 If the seller doesn't register you still have to pay, but the handling fees might be lower (for me PostNL will reduce the fee from €16 to €4)

Maybe PostNL will be charging less than their standard tariff in some cases, but most other parcel services (like DHL) do not.  It will depend on the sender/seller what parcel services will be used.

 

[inkstainedruth]

The question I have about these new rules, is how it might affect orders from the EU to the US.  I've ordered a few pens from Germany and the Netherlands on eBay in the past (some inexpensive, some very expensive).  In the past, VAT *wasn't* charged, because the shipments were going to outside the EU (and that includes back when the UK was part of the EU, and I ordered a pen from Cult Pens, IIRC).

Ruth Morrisson aka inkstainedruth

[mr T.]

12 minutes ago, inkstainedruth said:

The question I have about these new rules, is how it might affect orders from the EU to the US.  I've ordered a few pens from Germany and the Netherlands on eBay in the past (some inexpensive, some very expensive).  In the past, VAT *wasn't* charged, because the shipments were going to outside the EU (and that includes back when the UK was part of the EU, and I ordered a pen from Cult Pens, IIRC).

Ruth Morrisson aka inkstainedruth

According to the Belastingdienst (Tax and Customs Administation in the Netherlands), goods exported from the EU to non EU countries will be taxed at 0% VAT. 

 

 

[Runnin_Ute]

1 hour ago, mr T. said:

According to the Belastingdienst (Tax and Customs Administation in the Netherlands), goods exported from the EU to non EU countries will be taxed at 0% VAT. 

 

 

That's good to hear. 

[inkstainedruth]

Yes it is -- my two most expensive pens (the Pelikan M405 Stresemann and the M405 Blue Black) were purchased a few years ago from Rolf Thiel at Missing Pens.  

Thanks, mr. T!

Ruth Morrisson aka inkstainedruth

[MichaelHall]

I feel like the world of (affordable) pens has suddenly shrunk significantly for (poor) continental Europeans. My workhorse pens are several Pilot 78G+ and Wing Sung 698's, all under the 22 Euro mark. Now those are prohibitively expensive. Those days are over.

 

Even when people in the EU bought 50 Euro pens from AliExpress, usually there was no tax or customs because the seller would declare it as 20 euros or so. Those days are over.

 

I bought from MrPen (Italix) and Diamine in UK. Those days are over.

 

I bought ink from funky Japanese websites, one bottle at a time to avoid the government juice. Those days are over.

 

Yes, I do sometimes buy from continental European shops, but often websites are not in English, often shipping charges are the same (high) charges whether you are in the EU or in Tahiti, and local shops no longer even have Pilot MR2's much less anything premium.

 

What pens are good to buy in continental Europe now?

 

 

[A Smug Dill]

27 minutes ago, MichaelHall said:

I feel like the world of (affordable) pens has suddenly shrunk significantly for (poor) continental Europeans. My workhorse pens are several Pilot 78G+ and Wing Sung 698's, all under the 22 Euro mark. Now those are prohibitively expensive.

 

It isn't a limited that the outside world is imposing on you, though, just because you know and prefer those pen models. HongDian, for one, has been pushing out heaps of new models month after month; and several I've tried impressed me sufficiently, such that I ordered three or four more units of each of those to give away. They are all relatively cheap, and each would be under €22 inclusive of shipping to, say, Germany. So, while the part of the landscape you're familiar and comfortable with may be getting pared back, but other parts of that world of affordable pens are at the same time expanding. Whether it'll cost you time, effort, money, and/or heartache to find out more about the new pens and perhaps test them is a different matter; and that AliExpress will slap VAT on top of the order total is also a different matter, when:

 

45 minutes ago, MichaelHall said:

I bought ink from funky Japanese websites, one bottle at a time to avoid the government juice.

 

… forcing you to pay taxes and duties that you imagined avoidable and would rather not pay, and perhaps kick you out of your comfort zone, does not mean there is now less choice (cf. the size of “the world”), even if some of the new options are less desirable in some way in your mind.

 

48 minutes ago, MichaelHall said:

What pens are good to buy in continental Europe now?

 

Pelikan and Aurora are still good, as is Lamy, I'd say; and paying VAT on those pens would not be a new imposition that continental European has just started having to confront.

[Detman101]

I admit that I did not understand this dilemma until my pen-friend in the Netherlands attempted to send me a package...costing him the equivalent of $30 USD for a package that didn't weigh more than 10 ounces!!
Just to see...I turned around and asked the postal attendee here where I live how much it would cost to send that same package BACK to the Netherlands...$12 USD.

That's just unacceptable...it's highway robbery. (Or airway robbery...)