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If a barefoot citizen orders goods from outside the EU, practically from China, below a certain value, he does not have to pay VAT. This safe value is 22 euros. In other words, in the case of plastic tabs, discounted products and gadgets that can be used for uncertain purposes, there is no complicated VAT administration required and of course there is no VAT to pay.
The reason for allowing VAT-free imports is that it is simply not worth dealing with for less than a certain amount. Each package is another matter of authority, another document, plus administration, all for pennies. So bypassing the rules is not an impossible task as the Union is flooded with packets and the authorities can only randomly check that the packets are actually hidden and the value written to the packet. That is, only the many wooden logs turn out to be mobile phones.
The end of the story
This will end next summer with regulations that, on the one hand, subject all imports to VAT and, on the other hand, subject online markets, that is, the interfaces where businesses are conducted, to VAT. Such platforms include Ebay, Amazon, Wish, and other similar portals. They are not currently involved in the sale, they only provide an interface for the transaction to take place. The purchase is made between a Chinese seller and an EU buyer, and the platform has nothing to do with it at the moment.
Delayed due to the epidemic situation, the rule that the market also participates in the transaction as an intermediary in such sales is delayed, not since January, but only as of July, Gábor Farkas, director of the indirect tax group of PwC Hungary.
As an intermediary, subject to certain conditions, you will be asked to declare VAT as the first person to service the imported merchandise. In practice, it will appear that the buyer receives the product from that platform at a price plus VAT and the company pays the VAT in the budget. In the case of companies, other rules apply, since in this case the buyer is also subject to VAT, so if certain conditions are met, he can deduct the tax collected in advance.
That’s it and you’re done
This means that our orders in China will be more expensive. If we only charge you VAT, it will be 27% in Hungary, in all Member States as much as the VAT rate. If we take into account other losses, there are even more.
The decision is based not only on the elimination of VAT fraud committed by the Union, but also on the incorporation of a leveling element in the system.
It will be much easier to set the tax rate so that the VAT, so to speak, has a pattern. Because while it is quite difficult to recover a tax debt from a Chinese company in hindsight, it is not a gimmick for an EU-based company. With the significant price advantage gone, everyone can decide whether it is worth ordering in China or not. Due to the fact that the price of imported products from China will not automatically be up to 20-27 percent lower, this sourcing method is likely to lose its popularity as well. And this can even have a significant impact on demand. And if dumping goes down, it just means different market conditions.
One site is enough
To technically manage the collection and payment of VAT on products, the states will operate a special single window. This is so that a company, say Ebay, does not have to register for VAT in all Member States. A single establishment is sufficient and the administration can be coordinated according to the Member State in which the buyer lives and the VAT rate to be applied there. Once the VAT rate has been paid, it will be the responsibility of the relevant tax authority to transfer the tax amount to the appropriate state.
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