This measure was included within the VAT reform that the EU approved in 2015 to end tax fraud. Subsequently, in 2017, a new two-part plan of measures was approved, the first of which was introduced in 2019 and the second will now be introduced in the second half of 2021.
All orders from China will pay VAT and customs
With these reforms, basically, all Chinese companies or companies from countries outside the European Union will have to have a new VAT in Spain if your sales are greater than 10,000 euros for distance sales. Currently this only applied to physical sales, and with figures ranging from 35,000 to 100,000 euros, plus it only applied to physical sales.
This small legal vacuum meant that purchases from China did not have to pay VAT. That will change with the IOSS, or Import One Stop Shop. Under current law, any order to China valued at more than 22 euros, you have to pay VAT. Therefore, sellers in China have it very easy: declare the product for a lower value, be it a mobile or a tablet. Most pass without problems because all the millions that are received cannot be opened.
That will not matter, since, with the new law, all products, whatever they are worth, will have to pay VAT based on the declared value. Thus, from July 1, 2021, there will be two options to pay VAT. Orders of more than 150 euros continue as before, where they are subject to mandatory inspection and VAT, duties and other import-related taxes must be paid. The change is for those of less than 150 euros.
Thus, if the order is worth less than 150 euros, online stores will have to collect VAT from the user, and then enter it in the EU at the one-stop shop. Thanks to this, the import process is simplified, since you do not have to individually control all the orders that arrive. Another option is that, if the seller has not taken advantage of this one-stop-shop modality, it is for the user to do all the paperwork and have to pay VAT upon receipt. For this reason, VAT and 5.88 euros for customs would have to be paid, or 20 euros in the event that ADTPostales is the one that carries out the customs procedure.
There will be a third option: gifts. These gifts will be exempt from tax if their value does not exceed 45 euros, but it is necessary to perform paperwork to prove that it is a gift at the Post Office, and not from a commercial transaction.
The objective of this law is twofold: to avoid tax evasion, and encourage European citizens to buy products of the European Union. Therefore, it seems that the only comfortable option we will have is to buy products in European warehouses, as many sellers and stores such as DHGate, AliExpress, Gearbest or Banggood already do. As of today, hundreds of thousands of orders are received per day in Spain for less than 22 euros, so the VAT income is going to increase considerably.
AliExpress already warns of the change
AliExpress is already warning of the imminent change, where from 23:00 on June 30, 2021, AliExpress will charge VAT of the country of destination of the EU for purchases made on the web. Business-to-business sales are exempt, and the corresponding tax information will have to be filled in. Therefore, if you plan to order from China, you better do it now.