18.03.2021 Tax and Customs

Taxation legislative updates as of January 2021

From 1 July 2021, the VAT exemption for imports of consignments up to EUR 22 will be abolished. This means that orders from all online shops in third countries (China, USA, etc.) will become 20% more expensive, and even low value consignments will have to complete customs formalities, albeit in a simplified form.

The arrangements for distance selling within the EU are changing. From 1 July 2021, the current individual registration thresholds for different EU countries (€ 35,000 or € 100,000) will be abolished and replaced by a single EU-wide threshold of € 10,000. As soon as the Estonian company’s distance selling turnover exceeds the level of 10,000 euros, VAT must be added to the sales invoices and VAT paid on these sales in accordance with the rules of the EU member states where the buyers are located. It is important to note that from 1 July 2021, the threshold of € 10,000 will be calculated in total – sales to all EU countries will be counted together, not for each country separately, as has been the case so far. It is also important to point out that companies involved in both the distance selling of goods and the provision of e-services can reach a turnover threshold of EUR 10 000 fairly quickly. The point is that according to the planned changes, the turnover of distance sales of goods and e-services will be calculated together.