E-commerce has also brought about changes in international trade, as it has significantly changed its environment, including the cross-border flow of goods. According to regulations valid until 30 June 2021, goods arriving from outside the European Union and having a value of less than EUR 22 (HUF 6,000 in 2021)[1] were exempt from customs duties and VAT, while goods with a value of EUR 22 – EUR 150 (HUF 6000 – HUF 54 000 in 2021) were exempt from customs duties, but VAT was payable on goods having a value of higher than EUR 22.
The increase in e-commerce, taking place as a result of the rules in force until 30 June 2021, which allow products purchased outside the European Union and having a value of less than EUR 22 to be imported into the European Union free of VAT, has a very severe impact on EU Member States’ budgets even in the short term, and it also gives traders outside the European Union an unjustified competitive advantage over companies in the EU. Consequently, European Union Member States may suffer a significant loss of revenue, up to EUR 5 billion a year, according to some studies.
In order to prevent this loss of revenue, the VAT-free value limit of EUR 22 (HUF 6,000) in the European Union is abolished as of 1 July 2021. However, the duty-free regime continues, with the exception of alcoholic products, perfumes and colognes, and tobacco and tobacco products, which will remain subject to customs duties. Therefore, a customs declaration will have to be submitted for each consignment arriving in the European Union.
It is important to emphasize that exemption from VAT does not apply to products ordered before 1 July 2021, but only to those for which customs procedures had been initiated with customs authorities by that date as part of the process for releasing for free circulation! Therefore, consignments that arrive at the EU customs borders on 1 July 2021 or later and are declared for release for free circulation under the new rules will be subject to a customs declaration and VAT, regardless of the date of the order!
In parallel with, and in connection to, the abolition of tax exemption, and as another significant change, the European Union is introducing a system of facilitations, which offers a solution for foreign sellers, forwarders and private individuals to handle requirements of new regulations, customs clearance of goods and payment of taxes.
On the one hand, these facilitations require less information to be provided to customs authorities by customers for consignments with a value of less than EUR 150 (HUF 54,000), and, on the other hand, they provide two new options for paying VAT.
Sellers outside the European Union may register with the Import One Stop Shop (IOSS) system, if they sell to more than one EU country. In this case, buyers pay VAT on products to sellers already at the time of purchasing them. A seller wishing to use the IOSS system only needs to register in one of the Member States and make payment there of any VAT already collected from buyers, regardless of the Member State to which goods are forwarded. VAT collected is distributed among tax authorities of Member States, according to the destination of goods.
More information about IOSS is available:
The One Stop Shop / Import One Stop Shop system (OSS / IOSS) - Nemzeti Adó- és Vámhivatal (gov.hu)
Another way to pay VAT is for forwarders to use a “Special Arrangement” (SA) to simplify the payment of VAT. When it is used, the Tax Authority must be notified in advance. The special arrangements will apply only if customs procedures take place in the same Member State where the consignee is located. When SA is applied, no VAT will be charged as part of customs clearance and the consignment will be delivered to the relevant consignee after customs clearance. Upon delivery, the forwarder will collect the relevant public dues from the consignee and will periodically declare and pay public dues collected from consignees on a consolidated basis to the Tax Authority.
If neither the seller nor the forwarder applies these facilitations, VAT will be paid by the consignee as part of customs clearance at the time of importation.
In Hungary, NAV’s new proprietary system, the eVÁM module, is designed to handle the e-commerce traffic, ever increasing in complexity and volume. For companies, this means that the new system will be able to quickly process a significant number of customs declarations submitted at the same. In the module, private individuals having a customer gateway registration and the carrier cooperate with NAV and provide identification details for the consignment – the goods ordered can undergo customs clearance, with less data provided, through a web interface.
[1] The value limit of EUR 22 means a value limit of HUF 6,000, taking into account the official HUF/EUR exchange rate (252.19 HUF/EUR) valid as quoted by the Central Bank of Hungary (MNB) on the day of the entry into force of the Act promulgating the International Treaty concerning the Accession of the Republic of Hungary to the European Union, and taking into account that the said paragraph also states that the amount of money obtained as a result of the conversion shall be rounded to HUF 1,000 using the rules of mathematical rounding.