The Effects of Modernized VAT Regime on eCommerce Logistics


In order to eradicate fraudulent practices and ensure progressive cross-border trade, the EU has come out with a new VAT regulation which does impact the entire eCommerce logistics ecosystem. The VAT regime intends to modernize operating mandates and keep up with the ever-evolving eCommerce world. 


But the impact of the modernized VAT regime on order fulfillment triggered major cause of concern for eCommerce brands and the partners. This post goes on to explain what the eCommerce modernized VAT regime and its impact on eCommerce logistics are all about.

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Modern VAT Regime: The New Status Quo


As earlier mentioned, the new VAT regime has brought in significant changes to global logistics shipping, virtually altering the establishment to expel the complexities of VAT collections and unending costs. Some of the primary alterations in the modernized tax regime include: 


1. Uniformed Turnover Threshold Within the EU

Instead of a country-by-country VAT threshold as was the case in the previous VAT regime, the modernized VAT act has introduced a blanket limit of 10,000€ to all EU members for businesses registered within the EU territory.  Aintra-community distance sale happens only if this threshold is exceeded. 


2. One-Stop-Shop Extended to Consumer Goods

The new tax regime extends the scope of the One-Stop-Shop (OSS) from only businesses that indulge in supplying telecoms, broadcasting, and electronic items, to cover all sorts of consumer items. There is also the introduction of an Import One-Stop-Shop for goods coming from non-member EU countries.


3. No VAT Exemption for Low-Value Shipments

A distance of sale concept has come into the modernized tax regime from select items to all goods, nullifying the VAT exemption of small-value consignments of under €22.


4. More Responsibility for Platforms

In certain instances, especially those where the Import One-Stop-Shop (IOSS) is not available, other types of logistics service providers are now saddled with the responsibilities of facilitating import activities and collecting import VAT.

Effects of the Modernized VAT Regime on eCommerce


The impact of the new VAT regime has been felt all through the eCommerce segment from the manufacturers to the end consumers, and some of the most important impacts include:


1. Most Sales Are Subjected to the Tax Rate of Buyers’ Countries

In addition to the fixed threshold of €10,000, the VAT rate for Non-EU brands is now calculated based on the inter-community distances sales and would depend on the rules of the member states of where the transport ends. 


2. VAT is Now Chargeable On All Relevant Goods

As mentioned earlier, VAT is now present on other consumer items, as against the previous system where small-value consignments had tax exemptions. The past VAT regime was previously unfavorable to EU sellers as they had to charge a higher rate than their non-EU counterparts.


3. New Rules to Regulate Sellers

These new rules would bring sanity to cross-border eCommerce, encourage transparency and ensure that sellers of all sorts to shy away from fraudulent practices and indulge in fair market behaviors.

eCommerce Logistics Must Adapt to The New VAT Regime

Ratther than only be considered as a tighter regulation, the modernized VAT should be treated as opportunity to adopt transparency and efficiency in their operations and they can react to these changes in the following ways:


1. Integrate Big Data and Other Sources of Information

Instead of making critical business decisions that could potentially affect revenues based on whim and impulse, they can utilize data-based sources to make well-informed decisions that are void of sentiments.


2. Invest in Logistics Infrastructure

Adding to already existing logistics infrastructure either in the form of personnel or equipment would go a long way in streamlining and making eCommerce logistics operations more efficient and cost-effective. 


3. Optimize Logistics Distribution

Optimization of eCommerce logistics operations would be a crucial way of complementing the new tax regime. eCommerce brands can either invest in technology or partner with relevant 3PL and last mile carriers to streamline their operations. 


4. Transparency of the Logistics Process

By adopting technology in their eCommerce logistics operations, various components of the global shipping logistics like fulfilling, distributing, etc., which can be tracked in real-time thereby minimizing operation cost and improving revenues and consumer satisfaction.

Final thoughts

The modernized VAT regime introduced by the EU clearly has the objective of sanitizing the state of cross-border eCommerce. Although, one can not deny that it has brought about significant impacts that eCommerce logistics and brands need to adapt. These stakeholders need to realign their operations to these changes in order to comply with legal requirements.


Instead of going through the hassle of complying with the modernized VAT regime, eCommerce brands are best suited to outsourcing all their logistics concerns to YunExpress, the professional eCommerce logistics service provider that is already accustomed to the new VAT regime. 


YunExpress is a professional cross-border eCommerce logistics service provider with over seven years of experience on offering global direct line shipping service. The products they offer include; direct Cross-border Business to Consumer Lines, Postal Parcel Deliveries, FBA, and International Express Deliveries.


YunExpress delivers parcels via all modes of transportation. Visit the website to start enjoying a seamless product delivery.


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