Small shipments from Russia or China will become more expensive: VAT exemption abolished Business

Shipments from third countries such as China or Russia are currently not subject to VAT at all up to € 22.

However, in the case of distance trading within the European Union itself, there is no such set limit, which leads to a competitive disadvantage for people in the EU, according to the Ministry of Finance, which presented the project.

“They have to pay VAT when they sell goods to EU consumers, regardless of the value of the goods.” Therefore, it is proposed to harmonize these standards at EU level, ”says the draft explanatory memorandum.

The amendments also sought to cover bottlenecks that had allowed the population to abuse values ​​significantly lower than the goods actually ordered during the coronavirus crisis.

A study by public policy analysis and consulting firm ESTEP showed that last year the Lithuanian business sector did not receive 142 million LTL due to e-commerce from third countries. 18 million euros in revenue. EUR: low value shipments. This is about 1 percent. the entire turnover of the Lithuanian retail trade.

The European Commission has found that around € 7 billion is not raised in Member State budgets due to tax exemptions and misreporting. by year.

“The benefit, which was valid year after year, has basically become a source of abuse and a tool for those who sent goods from third countries with a higher value, but declared a lower value to avoid VAT,” said Mykolas MEP Majauskas during the approval of the law.

“There are still many such cases to this day,” he added.

Prime Minister Saulius Skvernelis said he supported abolishing the benefit because it was not beneficial to Lithuania.

“This kind of trade with China does not bring us much benefit. We are really losing, the benefits could disappear,” the prime minister told reporters on the Seimas on Thursday.

The bill was voted unanimously and supported by 76 parliamentarians.

The law stipulates that VAT on small shipments will be applied to online marketplaces, regardless of whether they receive the physical shipment or whether it travels immediately to the buyer of the item.