Shein, Wish, Amazon, Alibaba: A New Tax on Your Online Purchases Arrives on July 1st

Finance Lifestyle
A 20% VAT tax will apply from this Thursday, July 1, 2021 on products purchased online and not coming from European Union countries

A 20% VAT tax will apply from this Thursday 1st July 2021 on products purchased online and not coming from European Union countries. 

This is a new regulation that will directly affect your purchases on the internetFrom the 1st July 2021, for all online orders of products from countries outside the European Union (EU), a 20% VAT will be imposed.

This tax already existed for products costing more than 22 eurosBut a European directive passed in 2017 put an end to this rule. From now on, all products regardless of their value will be affected.

Thus, the little skirt or the super sweatshirt that you spotted at 10 euros will go to 12 …

Competition rules

It is this Directive, translated into French law, which comes into force on 1st July. The European Commission justifies this measure in the name of re-establishing competition rules with European companies.

“While most non-European companies show fair play, this exemption has allowed some sellers to fraudulently declare high-cost goods, such as smartphones, at a lower price only to benefit from this exemption, thus selling off European companies who had no choice but to charge their European customers the full rate of VAT on the same products, ”the Commission explained in a press release.

A rising price for consumers

In the sights of the EU, companies like the Chinese e-commerce giant Alibaba had found many tricks, such as the splitting of parcels, to pass below the 22 euros mark. But soon, no need to look for a European online ordering platform to escape it: it is the goods ordered and not the purchasing platform that will be taken into account.

Concretely, this means that if you buy jeans or an electronic product that does not come from one of the 27 EU countries on Amazon, Alibaba, Wish, Shein, Asos or even the French Cdiscount, a tax of 20% will be applicable. For the purchase of a sweater at 20 euros, it will therefore be necessary to add 20% more VAT and pay a total of 24 euros. Not to mention the shipping costs.

Payment upon ordering or upon receipt of the package

This VAT will be invoiced either by online platforms or by delivery services. The stake of this new regulation is considerable since, with the epidemic of Covid-19, the place of online commerce in France has exploded.

“In France, we will thus go from 15 million electronic customs declarations to 450 million” explained the Minister for Public Accounts, Olivier Dussopt to our colleagues in Paris.

This new regulation will also be a financial gain estimated at several billion euros which will fall back into the state coffers. 

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Really helpful article! You really have a great stuff on this topic! Thanks for the valuable information…