The impact of the removal of the de minimis excemption for Postal & Express couriers!

Only large suppliers will apply for I-OSS and for them it will take a long time to have all in place. Therefore, Postal or Express Couriers will need to handle a Fallback procedure. PayGround has developed an automated system for this. A system that was used by PostNord when the de minimis was removed in Sweden 2018.

The fallback procedure

“Because the EC does not expect all suppliers to register under the I-OSS, a fallback procedure is proposed, even though suppliers formally have to apply for the I-OSS.  EU countries must allow postal operators, express couriers and customs agents to report and pay import VAT electronically on the basis of a monthly declaration, on behalf of the end-consumer, a third-party collection system. Without these arrangements this would result in the payment of import VAT on every single parcel import.

This procedure takes away the need to pay the import VAT directly at the customs border. However, it only applies to goods with an intrinsic value of not more than 150 euros and when goods remain in the EU country of importation. An important remark is that the service provider only needs to pay VAT to the customs office of importation if the VAT has effectively been collected from the end-consumer.

As a response to these arrangements, some postal operators are working on pilot-projects together with e-payment service providers to be able to charge and collect import VAT to consumers via an e-payment request before the actual import of the parcel.

In case the supplier does not apply the I-OSS and the postal or express courier cannot apply the fallback procedure (for example because the goods are imported in name of the supplier), the supplier must report both import VAT and sales VAT. The import VAT can be deducted in the regular VAT return or exempted by using a deferment system (not relevant for all EU countries). This situation may occur more than expected because of the fact that most non-EU suppliers (or marketplaces) sell to end consumers in multiple EU countries and not only to consumers in the country of import. This will have an impact on the express courier companies and customs agents, assuming the national postal operators mainly deliver to home country consumers.

Whether the fallback procedure applies or not, it could in both cases result in major disruptions in the warehousing process because postal & express couriers may have to provide storage for a high number of parcels until payment is made”