New EUROPEAN VAT to Buy on Aliexpress

You may have already heard about it: On July 1st, 2021, the “Import One Stop Shop” (IOSS) was introduced, ie to pay VAT on all products that we import from outside the European Union. How will this affect our purchases on AliExpress? Are the bargains over? In today’s article, we’re going to tell you all about it.

What about VAT from July 1st, 2021?

On the occasion of the VAT reform plan adopted by the European Union in 2015, it was agreed that all products imported into the EU from July 1, 2021 must pay VAT in their respective country. This not only applies to products that come from China, but also from other countries outside the European Union.

Why are you applying this VAT Reform now?

Previously, items that we bought for less than € 22 were exempt from VAT. Both the sellers and we (the buyers) took advantage of this to try to get rid of paying taxes by almost declaring the items for less than 22 € in value.

As you know, until now the tax office could only check whether this was true or not through customs clearance. But with the thousands of packages arriving in Spain every day, it was impossible to check them all. Obviously, states ditched the batteries and changed the law to collect everything they had previously missed.

How do I have to pay VAT from July 1st?

We are already assuming that you usually do not have to process anything during customs clearance. The post office will not ask for any amount if you want your package to be delivered.

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Everything will be a lot easier: The IOSS (Import One Stop Shop) will enable platforms like AliExpress to manage VAT themselves on items with an amount of less than 150 €. This means that now when you buy an item you pay the VAT directly through AliExpress and they are regularly responsible for paying the tax authorities. Hence, your shopping experience will not change anything.
The main change is that customs will no longer hold your orders (unless you buy illegal products, of course).

AliExpress has been using this method in the UK since the beginning of the year

This increase was planned for the beginning of 2021 and was postponed to July of this year due to the Covid-19 pandemic. In countries like the UK, this method was started in January 2021 and it doesn’t seem to have been a major trauma.

What about AliExpress items over 150 €?

Orders over 150 € seem to be the exception and continue to work as before.
Nothing has been confirmed yet, but most likely you will not pay anything at the place of origin and if the order is stopped by customs you will need to fill out a DUA (Unique Administrative Document).  In any case, for orders over 150 €, it is always a better option to look for items dispatched from warehouses within the European Union or from AliExpress Plaza. This way you will avoid a lot of headaches.

What if I buy from warehouses in the European Union?

AliExpress has been setting up warehouses in some European Union countries such as Spain, France, Belgium, Poland and the Czech Republic for a while (and there are sure to be more).

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These orders are also subject to sales tax. If you want to know more about these products shipped direct from European Union countries, you can read our article on Standard Shipping from Cainiao Warehouse.

So is everything getting more expensive?

From what some AliExpress sellers have told us, they are ready to cut their margins to make up for that increase, but we need to see how things develop little by little.

AliExpress has grown into a very important e-commerce company worldwide, generating brutal annual profits. Considering that a significant part of its advantages is due to the countries of the European Union, and Spain in particular (it is the third most important country in terms of sales in the world), we are sure that they will not risk losing competitive prices and losing Customers.

It is also true that many of the items we find are two or three times less than what we can pay in a local store (in addition to the wide range of products that we have just a click away). So we are sure that despite the VAT increase, we will continue to be compensated for purchases on AliExpress.

Pros and cons of IOSS

In summary, all of this has disadvantages and advantages:

Disadvantage

  • Orders to China are a bit more expensive because there is VAT.

Benefits

  • Sellers will likely adjust their prices lower so we won’t notice the increase as much.
  • There will be more and more European warehouses with a greater variety of products, so we can receive orders sooner.
  • We no longer have to worry about packages being stopped at customs.