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Forbes
20-07-2025
- Business
- Forbes
New EU VAT Rules For E-Commerce Imports Take Effect In 2028
Shopping online concept Starting July 1, 2028, new VAT rules will apply to e-commerce imports into the European Union. E-commerce sellers and platforms handling online sales will be responsible for collecting VAT on imported goods and can no longer shift this obligation to customers. This change follows a directive adopted by the EU's Council of Finance Ministers (ECOFIN) on July 18, 2025. It represents a significant change from how VAT is currently collected on cross-border e-commerce. To understand the impact, it's helpful to look at how the current system works and why the EU wants to change it. How VAT on Imported Goods Works Today Right now, when a business outside the EU sells goods to a customer within the EU, VAT is due. This applies regardless of the value of the goods. Unlike customs duties, which apply only to shipments worth more than €150, VAT applies to all commercial imports. VAT can be collected at two points. The first is at the time of import, which is the default method for most shipments. VAT is charged when goods enter EU territory and are cleared for free circulation. The person responsible for paying import VAT is the one presenting the goods to customs—this can be the seller or the carrier. VAT registration is not required just to pay import VAT. However, registering may be useful if the importer wants to deduct that VAT as input tax later. The second method, introduced in 2021, applies only to low-value consignments—goods worth €150 or less, excluding items such as alcohol and tobacco. For these shipments, sellers can choose to collect VAT at the point of sale instead of at the border. To do this, the seller must register for the Import One-Stop Shop (IOSS). VAT is then remitted to a single EU country where the seller is registered. Under IOSS, import VAT is waived, which allows goods to clear customs more quickly. However, IOSS is optional. If a seller chooses not to use IOSS and the goods are valued at €150 or less, another special regime may apply. In this case, postal operators or express couriers can pay the import VAT on behalf of the customer and collect it at the time of delivery. This means that most sellers can decide how to handle VAT on low-value shipments. Some register for IOSS. Others rely on couriers to collect VAT from the customer. If none of these special regimes is used, the default rules apply, and import VAT is due when the goods enter EU customs territory and are released for free circulation. Delivery Options for E-Commerce Sellers Shipping to the EU How do these VAT rules work in practice? For non-EU sellers shipping goods to EU customers, there are three common delivery methods. One widely used option is DDP, or Delivered Duty Paid. Under DDP, the seller is responsible for all import charges, including VAT, customs duties, and clearance fees. These costs can be estimated in advance and included in the checkout price, so the customer pays everything upfront. After the sale, the seller forwards the estimated amounts to the carrier, who manages the entire import process. The carrier handles customs formalities, pays the import VAT, and clears the goods. In this arrangement, the carrier is treated as the importer of record, which means the seller does not need to register for VAT in the EU. DDP helps avoid unexpected charges at delivery, making it a popular choice for businesses that want to offer a smooth and transparent customer experience. Another option is IOSS. If a seller chooses this route, they must register for an EU IOSS VAT number, collect VAT at checkout, and submit monthly VAT returns to the country where they're registered. This allows goods to clear customs without paying import VAT. IOSS is only available for goods valued at €150 or less. It can be a cost-effective solution for sellers handling large volumes, but it often requires appointing an intermediary in the EU, which adds administrative complexity and expense. The third method is to shift responsibility for the import to the customer. In this case, the carrier pays the import VAT on the customer's behalf and collects it from them before delivery. This approach is simpler for the seller, as it avoids any VAT registration requirements in the EU. However, it often leads to poor customer experiences, especially if buyers weren't expecting to pay anything beyond the checkout price. Why the EU Is Changing VAT Rules for Imports The EU has acknowledged that the current VAT system for imported goods is complex and inconsistent. Sellers must choose between multiple schemes, each with different rules, costs, and obligations. The €150 threshold limits the usefulness of IOSS, and allowing sellers to shift VAT collection to customers creates delays and a poor delivery experience. As part of a broader Customs Reform—still to be finalized—the EU aims to simplify rules and tighten enforcement. Proposed changes under this reform include eliminating the €150 customs duty exemption for low-value goods, introducing a simplified tariff regime for such consignments, and expanding the IOSS to cover all goods, regardless of their value. Additionally, the reform would make online platforms the deemed importer, holding them responsible for collecting both VAT and customs duties at the point of sale. However, the most immediate and concrete change is a separate directive adopted by ECOFIN on July 18. It focuses specifically on VAT for low-value business-to-consumer (B2C) goods imported into the EU and will take effect on July 1, 2028. What Changes in 2028 and What Sellers Must Do Under the new law, the seller or the platform facilitating the sale will be responsible for paying VAT in the country where the goods are imported. The option to let postal services or couriers collect VAT on the customer's behalf will no longer exist. Sellers will no longer be able to shift this responsibility to the buyer. To avoid dealing with import VAT at the border, sellers will need to use the IOSS system. If they choose not to use IOSS, they must register for VAT in every EU country where they have customers and goods are delivered. In addition, they'll be required to appoint a tax representative in each of those countries unless their home country has a mutual assistance agreement with the EU—such as the UK or Norway. Without VAT registration or payment, goods will not be cleared by EU customs. In rare cases, EU countries may allow the customer to pay import VAT as a fallback, but this will only apply if explicitly permitted by the Member State—and only in exceptional situations. Why IOSS Will Become the Default Option for Most Sellers The new rules do not change how IOSS works, nor do they fix its current weaknesses. Although the system still has gaps, it will become the only cost-effective way to comply with EU VAT rules on low-value imports. While IOSS remains optional in law, the new framework effectively forces most non-EU sellers to use it. Alternatives will involve multiple VAT registrations, the appointment of local representatives, and significant administrative costs. The businesses most affected will be those that sell low-value goods to EU customers and have, until now, avoided VAT obligations by using courier-based collection or other workarounds. From July 2028, these sellers will need to rethink their strategy for EU e-commerce sales. The opinions expressed in this article are those of the author and do not necessarily reflect the views of any organizations with which the author is affiliated.
Budapest Times
14-05-2025
- Business
- Budapest Times
Nagy: Hungary's government will keep fiscal stability a priority in 2025 and 2026
Márton Nagy, National Economy Minister, told MTI that Hungary's government will keep fiscal stability a 'priority' in 2025 and 2026, even as it undertakes the biggest tax cut program in Europe. Following an ECOFIN meeting in Brussels, Minister Nagy highlighted the rollout of personal income tax exemptions for mothers of two and three children, the doubling of tax allowances for families raising children and VAT rebates for pensioners. The minister said that the government had already decided on those measures and wouldn't make any compromises. 'We will channel those resources to Hungarian families and pensioners, not to Ukraine,' he added. He pointed to the challenge posed to all countries in Europe by the decline in competitiveness of the European Union and Germany, the need to boost defense spending and the global trade war. He noted that 16 member states, Hungary included, had requested the activation of an escape clause that would allow for greater fiscal manoeuvre when it came to defense spending. Minister Nagy acknowledged that the general government deficit had reached 71pc of the full-year target in January-April, as in earlier years. He said expenditures had climbed on interest payments for retail government securities and an annual pensioners' bonus. Budget revenue rose in line with expectations, supported by increasing consumption, even as GDP underperformed expectations, he added. Minister Nagy noted that the government had earlier modified the full-year general government deficit target to 4.1pc of GDP. The government is actively analysing budget trends and will make corrections on the expenditure side, if necessary, he said. The 'basic rule', he added, was for the general government to break even, excluding debt maintenance costs. The government will bring down interest expenditures, reducing the deficit and state debt levels in the coming years, he said.
Bloomberg
12-05-2025
- Business
- Bloomberg
In Full: Greek Finance Minister on Trade, Loans, Economy
00:00 So listen, we just had the press conference from Geneva, from the Swiss. We have this sort of reprieve on the trade deal with the United States and China sitting here in Brussels, sitting in Athens. What does that tell you about what the United States is trying to achieve? And do you think that puts us closer towards some kind of resolution with the United States? First of all, it's great to be with you. I think that the news are positive. It's a positive development. The one that we are seeing. Obviously, we will have to study the details of any agreement as we plan to do in the Eurogroup and the ECOFIN meetings with my colleagues at the EU Council. But overall, our position as Greece, you know, we're a member State of the European Union that believes in free trade, in a union that believes in free trade. We hope to lower the temperature in the room, and any such deal, any such development is already reflected in the markets is quite positive. And in terms of kind of what we because we also heard from Scott Benson saying that the EU has fallen further back in the line in that press conference. He says that the UK jumped to the front. The Swiss are doing well. What is your sense of how close the Europeans are to actually reaching a deal with the United States, that their task is made more difficult obviously by the fact that there are 27 member states. Do you think that that puts us at a disadvantage, as here in Europe, in terms of negotiating an actual outcome? I had the chance to meet with Scott Benson in Washington in the context of the IMF spring meetings. And my message to my American colleague was the fact that we hope to move quite fast, quite swiftly, vis a vis achieving a very positive trade deal. The position of my Prime Minister, Kyriakos Mitsotakis, was ideally we should have a020 tariff relationship with the United States. As I said, we hope to lower the temperature in the room. I think it's feasible. We are a 27 member State union, as you suggested, but I think that we can move quite fast. And given what we saw from the U.K., you still have those 10% tariff barriers there. Does that give you an idea of kind of what you can hope for from a deal with the United States? Because zero zero seems fairly unlikely at this stage. Well, look, we're going to shoot for the best. We're hoping to achieve the best. Generally speaking, we should try to remove trade barriers. But if you look at the EU budget, by the way, of the section of the EU budget, I think it's around 13.7% of the EU budget already comes from tariffs as we speak. It's part of the overall EU trade architecture. But hopefully, you know ideologically what we believe as Europeans should be to eliminate those trade barriers. Plus we should be trying to remove the internal barriers that we already have within the European Union. Draghi Report the latter report, and this is part of an overall discussion of an overall new architecture that we should aim to strive for. And one of the features of the trade war has also been extremely heightened market volatility that we've seen throughout the world. I remember a time that when you had that market volatility, you had German and Greek yields moving in the opposite directions. They have been moving in lockstep. We've seen basically, you know, that story being sort of haven assets within Europe. What do you think the opportunity is from the sort of U.S. policy in terms of attracting capital here into Europe, attracting talent? How does your capitalize on kind of some of the uncertainty we've seen? And it's funny that you mentioned that volatility, because in the past, my country used to play a role in this discussion that we created that volatility. And now we're a stability story 15 years later after after the last decade plus. To add to your point, you know, we discussed that uncertainty is a much bigger problem. So the both the premium of those discussions of those trade deals that we're seeing on the ground right now on behalf of the United States with China, with the United Kingdom, with us as a next step is to remove that uncertainty from the table in order to have know positive a positive growth dividend in this debate. Is it an opportunity for Europe? Yes, we should. We should always view crisis as opportunities. If you look at European history, by the way, in every move of European integration, you had the crisis that catalyzed that integration, which we then metabolized as a positive institutional reform move. We should be able to do the same. The banking union, the savings and investment union, the Capital Markets union, all of those things that we have been discussing, as you very well know, for quite some time. It's a topic, again, of discussion at the Eurogroup meetings, at the ECOFIN meetings. It's an opportunity and we should grasp it. And when you think about that integration kind of concretely, because again, as you know, we've been talking about the Capital Markets Union for a decade at least, and now we have some renewed urgency. But I'd like to get a sort of an idea from when do you think we can make meaningful progress on this? And where do you sort of stand and where do you think the sort of hurdles are the hurdles to that? We have to negotiate the full spectrum of things with details of, you know, member states sensitivities and all of those discussions. But again, a crisis can help us, regardless of is a very moving those sensitivities vis a vis removing those hurdles. I think that there's a real opportunity on the table and we plan to be very constructive with regards to achieving a very positive result. And I also want to get your your take on some of the domestic issues going on within Greece. You are now rescheduling, you're paying ahead of schedule a lot of your first bailout debt. Is that something that we can expect more of? When do you think the first bailout can be completely behind you? Are we expecting that to come ahead of time? We should be completely behind this by 2031. This is ten years ahead of schedule, as we have been discussing, both domestically and internationally. For us, for my generation, for my government, fiscal prudence is not a policy choice. Fiscal prudence is a regime. You know, after having a very difficult decade, the last decade, we lost one. Four points of GDP. Right now, we're growing ahead. Much higher than the EU average, 2.3% growth. We had the headline surplus. Six countries in the EU had the headline surplus. We were one of the six and we plan to continue de-escalating our debt. We don't plan to pass the bill to the next generation as all the previous generations in Greece did. And in this context, we hope to create positive tailwinds, even if we see negative headwinds in the international economy. And part of the kind of contributor to that surplus that you had, that a surprise surplus that you had last year ahead of that is quite ahead of what anybody had anticipated was a drive to basically deal with tax evasion to collect taxes. Again, is this something that we can expect more of going forward? And what is it going to mean, budgetary? Do you expect more surpluses in the future? And how big do you have an idea of how big that shadow economy is and how much revenue could be there for you? The first point would be that the expectation for the next primary budget surplus for next year for this year is 3.2%. So overall, we hope to achieve primary budget surpluses in all future scenarios. Second, if you look at studies that were conducted on behalf of the IMF in the previous years, the shadow economy was calculated to be in the ballpark figure of 30%. In the past it was even 40%. In the last IMF study that calculated the shadow economy in Greece, the number was 15%, and right now it's even lower. We plan to lower it further, using digital technologies to capture tax evasion. We managed to do that and achieve the budget surplus that you mentioned before. We had a VAT gap. We have a value added tax in Greece. Half of that VAT gap is already captured by our smartly shaped policies. We hope to do more. Overall, I would say digitization is a success story for Greece. If you look at our government platform that year, it has more than 2000 services offered digitally. And I've talked to a lot of finance ministers over the last couple of months. And as you can imagine, the focus has been on trade. I just want to return to that just for a moment. Do you have an idea? Do you have your arms around how damaging this could be to the trade war is to the Greek economy, or is it still too early to say? Because every finance minister I spoke to in the last few months said that basically it's incalculable. Now, do you have an idea of what the damage to the Greek economy could be? I adhere to the position that is extremely difficult to calculate the effects, the primary level of effects in Greece, if you look at them, they are limited. We have less than 5% of our exports. 4.8% of our exports go to the United States. It's less than 1% of our GDP for trade. But that's a huge flow for trade. We're a maritime nation, It's a huge flow for trade. We're primarily worried about the second order effects. What would happen, for instance, if the American economy moves into a recession or even to the inflationary environment? What happens if you have a recession in certain European markets, which they directly interact with the Greek economy? All of those things worry us. So this is why we believe that we should remove as much as we can the heat from the room. And one of the topics that you'll be discussing today will be no doubt the defense plans within Europe in terms of dealing in Greece is one of these sort of higher spending nations in terms of GDP, in the NATO commitment above 3%. You know, the Trump administration would like to see 5%. Do you think that we need to get to a world where we're closer to 5% rather than 2%? And is there an avenue to get there without European joint debt? And where do you sort of appraise the debate on the question of joint debt for defense in Europe? I would say, first of all, that for us, defense spending was not a policy choice. For us, it was geographic destiny. It was one of the things that we had to focus on and invest on many generations before. And we're hoping to do it better in the future with more spillover effects on the economy. There were certain Bloomberg reports in the past, which underlined that Greece was not spending the defense amounts in the maximum spillover effects capability that it could. We hope to do more of this. For us, that would be a growth dividend. But overall, the treatment of defense spending as it currently takes place in the context of the EU Council, I think it's positive we should have some exemptions vis a vis the new fiscal rules of the European Union and the current geopolitical environment mandates those exemptions. And you know, we pay their fair share even before more EU member states should be able to do that. Germany is now doing that. I think that we should have those degrees of flexibility with regards to achieving this. And it's a sort of final question on trade. This is another question that I think is a very big one, a difficult one to answer when we look at the trade barriers that were erected between China and the United States, the big concern is that all of that overcapacity flows to rich markets. There really is only one that rivals the United States. That is a European Union. How do you treat some of that oversupply coming from China, potentially coming into the European market? And what we're seeing from the United States, rewriting this trade order? What have we learned about how trade deals should be structured and potentially differently in the future to protect, you know, sovereign industry? We don't yet know. There is lots of uncertainty. There is lots of uncertainty on the table right now in all of those discussions. We don't yet know if we're going to be in a zero in a limited or in a high state of environment, you know, the world that we're going to be at in 90 days, 100 days from now will directly affect the answer to your question. But what we do know is that tariffs are going to directly affect supply chains. If we look at what's happened in the past, think the 1930s Smoot-Hawley Tariff Act in the United States this. Had a very adverse effect for the global economy. We should do our best with regards to trying to avoid that at all costs. And this is what we plan to do at the Eurogroup in the vehicle for meetings.
RTÉ News
12-05-2025
- Business
- RTÉ News
Donohoe to attend Eurogroup and ECOFIN meetings this week
The Minister for Finance and President of the Eurogroup Paschal Donohoe is in Brussels this week to chair the Eurogroup meeting today and attend the Economic and Financial Affairs Council (ECOFIN) meeting tomorrow. At the Eurogroup meeting, Mrr Donohoe will update his colleagues on the latest developments at the recent IMF Spring meetings, including key takeaways from the G7 discussions. Ministers will have an opportunity to take stock of the health of the euro area banking system after updates from the Chairs of the Single Supervisory Mechanism and of the Single Resolution Board as part of their twice-yearly reporting. The Commission will also provide an update on the negotiations on the EU bank crisis management and deposit insurance (CMDI) framework. ECOFIN is due to start tomorrow morning with a formal working breakfast featuring updates on the economic situation, as well as a debrief from the Eurogroup the previous day. During the meeting, the Commission will present its Communication on the Savings and Investments Union, with a particular focus on the upcoming proposal on securitisation. Ministers will then discuss the state of play of a number of financial services and taxation legislative proposals and be invited to agree a general approach on the Directive on VAT rules for distance sales of imported goods and import VAT. An exchange of views on the economic and financial impact of Russia's aggression against Ukraine will also be held as welll as a policy debate on the Security Action for Europe (SAFE) proposal.
