Proposal for a Council Regulation amending Regulation (EEC) No 2658/87 as regards the introduction of a simplified tariff treatment for the distance sales of goods and Regulation (EC) No 1186/2009 as regards the elimination of the customs duty relief threshold

Summary:

Legislative initiative tabled by the European Commission on 17 May 2023, introducing amendments to Regulation (EEC) No 2658/87 as regards the introduction of a simplified tariff treatment for the distance sales of goods and Regulation (EC) No 1186/2009 as regards the elimination of the customs duty relief threshold.

Further information:

The change in trade patterns and the rise in e-commerce has increasingly become a major challenge for customs authorities across the European Union (EU). The high number of transactions for a low value makes it difficult for customs authorities to properly supervise the online trade flows, and for operators to comply with multiple reporting obligations per parcel.

Parcels valued up to €150 sent from a third country to a consignee in the EU are relieved from customs duties. The exemption was enacted in 1983 and increased in 1991 and 2008. Until 2021, there was also a VAT exemption on imported goods of negligible value. Both exemptions were justified in the disproportionate administrative burden of handling customs declarations. The end of the VAT exemption was decided to protect national tax revenues, to create a level playing field for the businesses concerned and to minimise burdens on them. From July 2021, all imported goods are subject to VAT and covered by a digital customs declaration, including for goods valued up to €150 for which no customs duties are due.

Whilst the measure was a success, the difference between the VAT and customs treatment of e-commerce goods renders the system very complex for the parties involved. Despite the fact that each parcel is reported to customs, checking the compliance with financial requirements remains a challenge for customs authorities. Maintaining the customs duty exemption for goods up-to €150 has left the door open for the systematic abuse of that threshold through undervaluing and splitting of consignments.

The proposed Council Regulation seeks to eliminate the duty relief for the importation of goods with a value not exceeding €150, and to introduce a simplified tariff treatment for goods imported under a business-to-consumer (B2C) transaction qualifying as distance sales for VAT purposes.

This draft law was adopted by the European Commission on 17 May 2023 as part of a wider legislative packages seeking to reform the EU's Customs Union. It built on a report of the Wise Persons Group on the Challenges Facing the Customs Union.

Official

European Commission: DG Taxation and Customs Union: EU Customs Reform https://taxation-customs.ec.europa.eu/customs-4/eu-customs-reform_en

European Commission: Press Release, 17/05/2023: EU Customs Reform: A data-driven vision for a simpler, smarter and safer Customs Union https://ec.europa.eu/commission/presscorner/detail/en/ip_23_2643

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