New EU VAT rules from July to make packages more expensive

New EU rules that come into effect on July 1 will mean that any packages bought from outside the European Union will become significantly more expensive. From next month, online shoppers will be required to pay VAT on all packages, including those worth less than 22 euros. 

Packages from outside the EU to become 21 percent more expensive

This change in law will mean packages bought in and shipped from the US and China, for example, will experience a 21 percent increase in price. In addition to this, any online stores that don’t immediately collect VAT at checkout will see their products experience a further increase of either four or seven euros to cover additional handling costs. 

Anyone who regularly shops internationally is therefore advised to pay close attention as to whether the retailer takes part in the EU’s so-called one-stop-shop system and charges VAT at checkout. The new law will also apply to any packages purchased before July which are only due to arrive next month. 

AliExpress and Etsy have said they will calculate VAT at checkout

Online stores like Wish and AliExpress which are located outside of the EU but are popular in the Netherlands will therefore see their infamously low prices rise this summer. AliExpress and Etsy have said they will charge VAT at checkout. UK online clothing store ASOS is yet to announce what action they will take. 

The EU has said it expects the new VAT law will generate a total of around seven billion euros per year for member states.