The world of e-commerce is on the brink of a revolutionary transformation within the European Union (EU). Starting from March 1, 2028, a sweeping change will reshape the dynamics of online shopping, business responsibilities, and customer experience. This pivotal change designates e-commerce platforms as deemed importers, a significant shift that places considerable obligations on these platforms in relation to customs duties and Value Added Tax (VAT). In this blog post, we will explore the implications of this transformation and how it will impact the e-commerce ecosystem in the EU.

–
READ MORE: How to Manage VAT and IOSS When Selling on Multiple Marketplaces
–

A Shifting Landscape of Responsibility

Historically, EU consumers purchasing from non-EU sellers online often faced unanticipated charges upon receiving their orders, stemming from customs duties and VAT. These unexpected costs could mar the online shopping experience. The EU is ushering in a paradigm shift in response to these issues.

Starting March 1, 2028, e-commerce platforms will be designated as importers, fundamentally altering cross-border e-commerce transactions. This transfer of responsibility requires platforms to guarantee the correct payment of customs duties and VAT on sales facilitated through their platform when goods are imported into the EU. The overarching goal is to empower EU consumers with greater clarity about the total costs associated with their online purchases, eliminating the element of surprise when receiving parcels.

The Transparency Advantage

The transition to platforms as deemed importers offers several advantages, with transparency being at the forefront. Consumers will now have a more transparent view of the costs associated with their purchases from non-EU sellers. By including customs duties and VAT upfront, shoppers can make more informed decisions and evade unpleasant shocks during the delivery process.

Furthermore, this change aligns with the EU’s broader objectives of enhancing consumer protection and fostering fair competition in the e-commerce domain. It levels the playing field by holding all e-commerce platforms accountable for their role in facilitating cross-border sales.

VAT and Customs Duties 

Another noteworthy facet of this transformation is the introduction of VAT and customs duties “by fiction.” This entails that even if goods are already imported at the time of sale, platforms may still be accountable for VAT, irrespective of whether they are the actual sellers of the products. This introduces an added layer of responsibility for platforms and underscores the urgency of adapting to these new regulations.

To comply with these new obligations, platforms may need to establish robust systems for monitoring and reporting on imported goods and VAT collection. Collaboration with sellers will also be essential to ensure precise VAT calculation and collection.

Implications for E-commerce Businesses

For e-commerce businesses operating within the EU or selling to EU customers, these changes represent a substantial shift in operational procedures. Companies will need to reevaluate their sales strategies, pricing models, and compliance protocols to align with the evolving regulatory landscape.

It’s worth highlighting that while these changes may present initial challenges, they can also usher in opportunities for businesses. Those who can seamlessly incorporate VAT collection and customs duty payments into their e-commerce operations may enjoy enhanced customer trust and satisfaction, leading to increased sales and customer loyalty.