Ecommerce – VAT and GST obligations on international sales

During the pandemic, millions of house-bound consumers around the globe embraced ecommerce for the first time, delivering a decade’s growth in a matter of months. This boom in online sales has continued and new customers and indeed new markets are only a click away. Overseas customs borders have historically provided protection and a safe harbour from VAT or GST obligations for remote and distance sellers. Ecommerce businesses could shift the responsibility for paying import taxes onto their customers. However, while this may still generally be the case for sales of goods to businesses (B2B), we have seen a huge amount of legislative change globally that could now require businesses anywhere in the world to register for VAT or GST in countries where they sell and ship goods to consumers (B2C).

The key indirect tax trends are:

  • Import VAT exemptions for low value goods being removed
  • Registration thresholds being removed or reduced
  • VAT / GST due based on customer’s location
  • VAT / GST charged at the point of sale by the seller and not at the border by customs
  • Contractual terms / named importer irrelevant for lower value B2C sales
  • New simplified VAT/ GST registration and compliance requirements designed for foreign businesses. 

At the same time we are seeing changing consumer behaviors and trends:

  • Increase in online sales (leading to higher sales volumes per country or state and new markets only a click away)
  • Better customer experience expected (customers don’t want additional demands for tax from customs or the courier) 
  • Increased in returns of goods (import VAT is generally lost and becomes absolute cost if customer the importer and returns the goods). 

Want to discuss how this impacts your business? Speak to one of our experts

Snapshot of countries that have brought into specific rules and registrations for remote B2C sales of goods:

  • UK
  • European Union (27 EU countries including France, Germany, Italy and Spain)
  • Switzerland
  • Norway
  • Australia
  • New Zealand
  • USA (40+ US states including California, Texas, Florida, New York and Illinois).
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Ecommerce Tax Trends Report 2022

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Ecommerce Tax Trends Report 2022

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