Cross-border commercial items: taxable from the 1st cent

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Double-digit growth in cross-border commercial items (small packets and parcels) faces postal administrations, CEP (Courier, Express and Parcel) service providers and customs authorities with enormous challenges. More than ¾ of all commercial items weigh less than 2 kg and are valued at under €150. On average western and central European, larger EU states are having to process significantly more than 100,000 cross-border low value commercial items every day.

Items sent from countries in the Far East are a particular challenge: in many cases the items lack a verifiable sender’s declaration, correct details of the value, description of content, or correct VAT registration based on a correct identification number. It is usually impossible to ensure that the lawful VAT is paid in the country of the recipient.

Status quo: huge VAT losses in the EU

In mid-December 2017 the EU finance ministers agreed to phase out the privileged position of the national postal administrations and the existing tax exemption limit for cross-border commercial items (mostly €22) by the end of 2020. At the same time, the introduction of electronic advanced data systems will be compulsory. Ecommerce portals and platforms will be required to transmit all the key data necessary to uniquely identify each individual commercial item, its content, value, recipient and import turnover tax identification number in a standardized format, in digital form, directly to the customs and tax authorities.

UPU and CEN working to define a data set

The Universal Postal Union (UPU) and the European Standardization Committee (CEN) are working to define a European and global data set designed to completely digitalize the analogue content description for customs and tax purposes. A European technical specification (CEN/TS 17073) supports a unique identification number, which is valid for each commercial item shipped in both, the postal and CEP worlds. Only so can a unique identification number be created for each commercial item, enabling the authorities to undertake a digital risk analysis with their actual analogue controls.

End of 2020: digitalizing cross-border delivery of commercial items of every value

The European Commission has set itself the task of defining the necessary legal and regulatory framework conditions by 2019 in order that the currently divergent postal administration and CEP processes can be unified in the digital world. They will be based on the WCO and UPU data set. Already more than 74 postal administrations (including all designated operators in the EU member states) have implemented and are supporting this data set.

The customs and tax authorities demand a unique identification number for each commercial item which is also connected to the merchandise management system of the online platforms and portals. The commercial item’s identification number allows the item’s content, value and characteristics to be digitally controlled. CEN is working under a EU mandate to create the necessary electronic advanced data systems (EAD) required for customs, VAT, and transport security, and to prepare guidelines for their implementation by the platforms and portals.

About the e-Logistics Alert

Ecommerce Europe is engaged in overcoming cross-border hurdles for e-commerce. The Ecommerce Europe e-Logistics Alert is designed to inform the wider e-commerce stakeholders about important developments and achievements in matters relating to European and worldwide e-logistics. For any questions, please write to lucacassetti@ecommerce-europe.eu

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