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EUROPEAN UNION

EXPLAINED: Why are residents in Italy being charged to receive small parcels from outside the EU?

New EU regulations mean people now have to pay VAT charges to receive even small parcels from outside the bloc. The Local spoke to experts to find out what those changes mean for you, and how to avoid paying more than necessary.

Ina FASSBENDER / AFP
Photo: Ina FASSBENDER/AFP

In early September, Helen Wood received a delivery at her office in a town outside Rome. It was a small present from her daughter – not an unusual occurrence.

But this time, the postal worker produced a slip demanding a payment of €3.26.

The package, which contained a tea towel and an artisanal wooden postcard from the Isle of Mull, was marked as having a value of just £5. Helen challenged the charges, but eventually paid up when the worker insisted they would have to return the gift to the post office depot if she didn’t.

“It’s absolutely ridiculous,” says Helen. “It feels like an abuse of the system.”

Helen, who has lived in Italy for 40 years, is one of a large number of EU residents who in the last couple of months have had surprise charges sprung on them for deliveries and gifts sent from outside the EU.

Emma Trend, an English language teacher who’s been living in Reggio Emilia for the past year having moved with her family from Spain, says she’s stopped ordering packages from the UK, and has warned her extended family and friends to stop sending them presents.

“It’s very bizarre how it’s all come about – it was almost like it was introduced without warning, and wasn’t thought through properly,” she says.

The changes have caused widespread confusion, leaving frustrated EU residents wondering where the charges have come from and why they were brought in in the middle of the calendar year.

What exactly is going on?

Until June 30th, 2021, packages imported into the EU with a value of less than €22 were exempt from import VAT charges. That exemption was abolished on July 1st, meaning that VAT is now due on all goods imported into the bloc.

The EU says the change was made to combat fraud via the widespread under-reporting of the value of goods to dodge the tax, and to make things fairer for companies trading within the EU.

It was supposed to come into effect from the start of January, but was pushed back to July because of pandemic-related delays.

The rule is just part of a raft of reforms designed to update the EU’s systems and bring them in line with 21st-century global trading practices, where international e-commerce accounts for a large chunk of the market.

What does this have to do with Brexit?

In one sense, the changes have everything to do with Brexit, since if the UK hadn’t left the EU customs union it wouldn’t be a non-EU, or ‘extra-EU’ country.

It’s important to bear in mind, however, that the abolition of the €22 ‘low value consignment’ threshold that kicked in from July is an EU-wide regulation that applies to imports from every extra-EU country, not just the UK.

Confusingly, after the UK left the EU customs union on December 31st, 2020, there was a brief six month window where EU residents were required to pay VAT on only those packages received from the UK that had value of over €22 – a threshold which was then reduced to zero on July 1st.

READ ALSO: Why sending parcels between the UK and Italy is more expensive after Brexit

Photo: JEAN-CHRISTOPHE VERHAEGEN/AFP

Until now I haven’t had to pay import VAT on any packages from outside the EU, regardless of their value. How is this possible?

It might simply be the case that your package slipped through the net – you technically should have been asked to pay the import VAT, but the customs authorities let it slide because they didn’t have the capacity to check every item.

Philip Munn, a VAT partner at the international tax and auditing firm RSM, also points out there is also a longstanding exemption for ‘personal imports’ (i.e., items you already owned) which remains in place with the new rules – so you shouldn’t be charged VAT, for example, to bring your existing furniture over to Italy from the UK when moving house.

I’ve noticed I’m also suddenly being charged import VAT for packages sent within the EU. What’s that about?

Sarah Shears, who heads up the VAT Group at the UK office of the global tax firm Andersen, says the changes that came in on July 1st also abolished what was known as the ‘distance selling threshold’ within the EU.

Previously, if EU suppliers selling to EU consumers imported goods with a total value of less than €35,000 per year into most EU countries (the threshold was €100,000 for Germany, Luxemburg and the Netherlands), they weren’t required to register for VAT in the buyer’s country, and could instead pay the VAT in the seller’s country.

This meant that a savvy customer in, say, Sweden could buy products from a supplier in an EU country with a much lower VAT rate (e.g., Luxemburg), to shave off costs.

The replacement rules hold that EU suppliers who sell goods with a collective value of more than €10,000 per year across all countries throughout the EU must now pay VAT to the country where the buyer is based using the EU’s new VAT ‘One Stop Shop’.

But because the transaction is occurring within the EU, you can pay the import VAT up front at the point of sale and your goods won’t be held at customs (because, after all, you’re trading within the customs union) – so it’s possible you may not even have noticed the change.

Photo: Ina FASSBENDER/AFP

How is the VAT charge calculated? Does it vary depending on where the package is sent from?

Each country has its own VAT rates for different items – for example, smartphones in Italy are charged at a standard VAT rate of 22%.

When an item’s subject to import VAT, you’re adding up the value of the item, plus things like transaction costs (how much you paid for shipping), insurance, and import duty, and then calculating the VAT based on the total sum – so you’ll be paying higher Italian VAT on a frying pan imported to Italy from the UK than the exact same brand of frying pan bought in Italy.

Some readers have commented that it seems like they’re paying more VAT on packages from some non-EU countries than from others. This shouldn’t be the case, say Munn and Shears.

“Anywhere outside the EU, one would expect them to be the same,” says Munn – although he points out that under the terms of the Trade and Cooperation Agreement between the EU and the UK, products manufactured and sent from the UK are exempt from EU customs duties.

Munn also notes that many sellers pass the responsibility of collecting the VAT on to the freight forwarding agent (i.e., courier or postal service) carrying out the delivery, in which case that company will charge an additional, separate, handling fee.

Italian residents will typically see this identified as diritti postali. Poste Italiane’s charge is between €2 and €15 per package, depending on its value – which means you could find yourself (as I did) in the strange situation of paying a  €2 handling charge and  €0.51 VAT to be allowed to collect a £1.31 magazine.

Photo: Andy Buchanan/AFP

What about presents? Do I really have to pay VAT on those?

Helen is now worried about what will happen this Christmas, when she would normally exchange gifts with family outside the EU.

“With people sending bulky cards with pop ups inside that maybe cost £2 to post from the UK, am I going to be charged  €3.26 to receive it?” she asks.

Emma says she’s told her family to avoid even sending her letters, in case she’s charged for those.

The EU’s taxation and customs union website reports that private packages with a value of up to €45 “are not subject to prohibitions or restrictions,” and the customs and finance authorities of various countries, including Austria, Finland, and Germany, also say on their websites that gifts of up to €45 are not subject to customs duty or VAT charges.

The website of the Italian postal service, Poste Italiane, says “if the item is not of a commercial nature (as the object is sent between private individuals on an occasional basis and without remuneration) and its intrinsic value is less than 45 euros, no charge is required.”.

However, in Italy at least, that exemption does not seem to have been applied. Many of The Local’s readers have – like Helen – reported being charged Italian VAT and postal handling fees for gifts valued at as little as €5.

As of September 15th, The Local had not received a response from Poste Italiane to a request for clarification on why in practice Italian residents are being charged to receive low-value gift packages.

Regardless, letters and cards should definitely not be subject to any VAT charge, say Shears and Munn.

Photo: CHRISTOF STACHE/AFP

So what can buyers in the EU do?

To go along with its new reforms, the EU introduced the ‘Import One Stop Shop’, or IOSS. Previously, non-EU sellers would have to register separately for VAT in each EU country they sold in. With the IOSS, they can now register for VAT just once, in whichever EU country they choose, in order to declare and pay VAT anywhere in the bloc.

The significance of this from a customer’s perspective, says Munn, is that with IOSS-subscribed suppliers the buyer can pay the import VAT at the point of purchase, avoiding the hassle of collecting the package from the courier or post office and paying an additional handling fee.

If you want to continue ordering products from a certain non-EU company, then, the first step is to ask them if they are signed up to the IOSS; and if they’re not, to ask them to do so.

Bear in mind that the IOSS can only be used for goods with a value of less than  €150 – for items with a greater value, VAT will still need to be paid on delivery.

In those cases, says Munn, many sellers have calculators on their websites that give you an indication of what your total costs are going to be. “Essentially they’ll say you need to pay £1000 now, but don’t forget you’ve got €400-500 of duty and VAT and other things to pay before the goods arrive on your doorstep” he says.

For gift packages, The Local is continuing to look into the current rules in the EU and in Italy, and will provide updates as we receive more information.

Member comments

  1. If an item is sent / exported from the UK (say to Italy) is the item not still exempt from UK VAT? Is this also the case when exporting an item from an EU country to a non EU country?

  2. This happened to me! A friend from South Korea sent me a gift valued at 30 euros, but in order to get the package, I had to pay another 30 euros. Thank you for this article explaining why this happened.

  3. As long term residents in Italy, with family in the Republic of Ireland, the UK and USA, we have been affected greatly by the change in the rules over parcels.

    We have told our family not to send us presents, and have stopped ordering items from the UK. Whilst we can access most of these through EU websites (Amazon It, Amazon De etc) one area we have problems with is getting books in English. We can get most of the books on Kindle, but we often still want to have the book physically.

    Paradoxically we have ordered items on Italian websites which have been supplied by UK based companies, without having to pay extra. We are not really sure why this so, and whether this has changed since the beginning of July.

  4. Hi. I’ve also been hit with crazy charges for presents from the US, have to pay the postal delivery woman in cash when she appears at our house, or I don’t get the package. At least now I understand what’s going on. Like others have commented, I have told family/friends not to send me anything. Same issue as others above about ordering English language books. Annoying.

  5. Recently I ordered from Ebay.uk Yale hinge bolts for my door here in France. I was obliged to pay an additional 5 euros charges for the importation. However, I am wondering if this is correct since the Chubb hinge bolts are apparently made in England; and as you wrote, should not attract any extra fees or charges.

  6. I ordered curtain fabric from England. I did extensive research into the cost of import tax etc. Several online sites I checked on were around 88 euros on top of the cost of fabric. I finally got a invoice from TNT for 140 euros. 50 being administration charges. Buying from England has become a no go area, for Brits in Europe.

  7. Last week ,from France ,I ordered 3 Hermesetas products via Amazon which arrived yesterday from the UK , I found the parcel in my letterbox.

  8. My US-based company sells to EU customers, but when I tried to sign up for IOSS, I was unable. Instead, I discovered that non-EU companies need a presence in an EU country to collect and remit VAT. That’s something smaller companies like mine don’t have. The EU (in their infinite wisdom!) won’t allow us to collect and remit their VAT, which makes this latest move protectionist and unfair. This article makes it seem like companies like mine can participate in the new system, but in reality, we cannot. We’re being shut out, which has negative consequences for us and our customers.

  9. It’s not just Brits in Europe. It’s anyone in Europe who receives gifts sent from the UK. The Italian example is replicated all over Europe. We have family in Denmark. A small birthday present to my wife’s sister, clearly labelled a present of less than £20 value prompted a charge of £25. The parcel never actually arrived at all and was returned to us in the UK, – 9 weeks later.

  10. I definitely want updates on this…I just paid 5 euros to receive a package my sister sent me from the US and the value she indicated was 15 dollars (correctly as it was trashy American junk food like Cheetos and Captain Crunch lol). I want answers on why I was taxed!

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For members

BREXIT

Is new court ruling the end for Britons fighting to remain EU citizens?

The Court of Justice of the European Union confirmed on Thursday that Brexit really does mean that Britons are no longer EU citizens. Claudia Delpero looks at whether there's any other way they can keep their rights.

Is new court ruling the end for Britons fighting to remain EU citizens?

The Court of Justice of the European Union confirmed on Thursday that Britons lost EU citizenship when the UK left the EU, on 1st February 2020. 

It is the first time the EU’s top court has rules on the matter, after a number of legal cases challenged this specific Brexit outcome. The decision also sets a precedent should other countries decide to leave the bloc in the future. 

What has the EU Court decided?

The Court of Justice decided on a case brought by a British woman living in France.

Before Brexit, she could vote and stand as a candidate in her town of residence, Thoux. But after the UK withdrawal from the EU, she was removed from the electoral roll and excluded from the municipal elections that took place in March 2020, during the transition period.  

As the mayor refused her appeal to restore the registration, she took the case to the regional court in Auch, which agreed to request an interpretation of the rules to the EU top court. 

Julien Fouchet, the barrister supporting her and several other cases on the EU citizenship of British nationals, argued that the loss of EU citizenship and voting rights was disproportionate. It would also be contrary to the EU Charter of Fundamental Rights, given that the woman also lost her voting rights in the UK, having lived abroad for more than 15 years.

Alice Bouillez, who has lived in France since 1984 and is married to a French national, could have applied for French citizenship, but did not do so because she said “this was not necessary” before Brexit and, as a former UK official, she had taken an oath of allegiance to the Queen.

On Thursday the Court of Justice announced the decision about her case. The court ruled that the “possession of the nationality of a member state is an essential condition for a person to be able to acquire and retain the status of citizen of the Union and to benefit fully from the rights attaching to that status.”

The court therefore confirmed that British nationals automatically lost their EU citizenship as a result of Brexit and, as a consequence, Britons also lost their voting and electoral rights in municipal elections in the EU (unless the country where they live set different rules). 

What is EU citizenship?

EU citizenship was introduced by the Treaty of Maastricht of 1992, when borders were opening and the bloc was integrating economically after the end of the Cold War. 

Under the treaty, every person holding the nationality of an EU member state is a citizen of the Union. EU citizenship is additional and does not replace nationality, the treaty specifies. But this creates the first form of a transnational citizenship that grants rights across borders.

EU citizens have the right to access each other’s territory, job market and services under the principle of non-discrimination. If they are economically active, they have the right to reside in other EU states and be joined by family members, access healthcare at the same conditions of nationals (for emergency treatment also when travelling temporarily), obtain social security benefits and see their professional qualifications recognised.

Beyond free movement, at the core of EU citizenship there are also political rights, such as participating in the European Parliament election, voting and standing as candidates in municipal elections when living in other EU countries, receiving consular protection from other EU states outside the EU, and taking part in European Citizens’ Initiatives asking to the EU to legislate on certain matters. 

Which EU citizenship rights have Britons lost with Brexit? 

For British citizens who were living in the EU before Brexit, the Withdrawal Agreement protects some of these rights. Britons covered by deal have their residence, access to work and education, healthcare, social security and qualifications secured, but only in the country where they were living before Brexit.

But the right to free movement in other EU states, consular protection in third countries, and the political rights attached to EU citizenship were lost, the Court confirmed. 

For British citizens in the UK, the trade and cooperation agreement has preserved some social security rights and, in theory, the possibility to have professional qualifications recognized when moving to an EU country. These provisions however lack details and may take a long time before they work in practice. 

As the “European Union” no longer features on British passports, the possibility to access EU lanes at airports to skip passport control queues has also vanished. 

“The loss of those treasured rights has been clear to those of us living in the EU from the early days of Brexit. But for Brits in the UK, the realities of life outside the EU, and the consequences of Brexit, are only just dawning. Long queues at the borders, roaming charges, obstacles to working abroad, etc. are the new reality,” said Sue Wilson, Chair of the group Remain in Spain. 

While she said the court’s decision was “no real surprise,” she argued that “this is not the Brexit the public were promised, or that the majority voted for.”

Can British citizens get some of these rights back?

Julien Fouchet was disappointed at the Court decision and promised to continue the legal fight, bringing the case at the European Court of Human Rights (which is not an EU institution). 

Other two cases on the matter of EU citizenship for British nationals are still pending at the Court of Justice of the EU. One of them aims to determine whether EU citizenship is a “fundamental status” that cannot be removed but Thursday’s decision could have already provided the answer.

Another option to reconsider some of the rights is the renegotiation of EU-UK trade agreement, when it will be reviewed in 2025. 

Meanwhile, the EU is revising the rules for non-EU citizens living in EU countries on a long-term basis, making it easier to move across borders. 

Applying for citizenship is so far the only option to regain voting rights, although not all EU countries allow dual nationality. 

Sue Wilson, who has long campaigned for the UK to stay in the EU, said: “There is only one way to restore the loss of our rights, and that’s to rejoin the single market, rejoin the customs union, and eventually, rejoin the European Union… Until that day, we will continue to be second class citizens whose rights have been diminished for the sake of an ideology.”

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