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04/14/2021  Main 

Importing from China, what changes from March 15

Imports of goods from countries outside the European Union (especially from China) have increased exponentially in recent years, thanks to the explosion of e-commerce and the very low prices offered by oriental marketplaces (e.g. Aliexpress).

In order to facilitate customs clearance processes, current EU regulations provide for VAT and duty exemption under 22 Euros of merchandise value, with almost no shipments being held in customs for assessment (proof of payment). Often sellers declare a lower value of goods than the real one (even 90%) in order to stay under the 22 Euro threshold and not to charge taxes to the customer.

This practice is also used in B2B shipments, where often the importer asks the supplier to indicate in the CI (Custom Invoice) a lower value of goods than the real one. If customs asks for proof of payment, a self-declaration or a written agreement with the supplier indicating payment on delivery is sufficient (because the Chinese charge after shipping, of course!).

The consequences of this system are obvious: failure to collect taxes from the State, unfair competition against sellers in the old continent. The European Union, faced with what has become a huge loophole (I use the term loophole because it is to all intents and purposes a loophole), has taken action with new legislation and a new system of customs clearance.

More capillary controls

As of March 15, 2021, the first phase of the program will begin, considerably increasing controls on imports from non-EU countries. This new system is called ICS2 (Import Control System 2) and should increase the security of shipments to Europe through new control procedures and information sharing between EU member states.

With ICS2, European customs will be able to more easily identify high-risk shipments and intervene more quickly to secure the transit of goods.

Entry Summary Declaration

To avoid customs controls, most imports contain vague and imprecise descriptions of the goods. In shipments to retail buyers, it is common to find terms like "gift", "spare parts" and "sample" in the description of goods, and to include a value of a few Euros (instead of the actual purchase price).

Starting from today, this will no longer be possible. In fact, with the new ICS2 system, shippers are forced to accurately describe the goods inside the packages using the Entry Summary Declaration and the unique HS code that identifies (globally) each type of goods.

In this first phase, European couriers and postal operators will be affected, as well as third-country postal operators shipping to Europe.

From March 1, 2023, this new system will also apply to all other postal operators, air and express carriers and international forwarders. On March 1, 2024, it will be the turn of shipments by sea and river, rail and road.

Goodbye 22 Euro threshold

From July 1, 2021 there will be no more "tax free" thresholds. VAT and duties will have to be paid on any import, even on shipments with a value of less than 22 Euros.

The only exemption will be for shipments under 150 Euros declared value, in these cases you will have to pay only VAT. Customs clearance costs will probably remain present, it is not yet clear if they will be subject to price increases by shippers.

The latter change was scheduled for January 2021. However, to give member states time to adjust to the new provisions, there was a six-month extension. That's why the new regulations will take effect July 1, 2021.

With these changes, buying goods from non-European countries will only become less convenient for B2C. Eastern marketplaces will probably adapt by including customs charges in the purchase price (as eBay did for USA, Canada and Australia). In this way it will become difficult to get around the rule and the "smart" will have to put their soul in peace and pay what is really due.

B2B imports (legal supplies) should not be affected. This new system could be an additional weapon to fight both tax evasion and illegal trade of counterfeit and dangerous products.

For more information, you can consult the source of the article on the official website of the European Union.