Online shoppers in Sweden will now need to pay VAT on all items purchased from outside the EU
PostNord, Sweden’s national carrier, has been forced by customs to collect VAT on all non-EU packages, including thousands of packages that arrive from China every day.
The change comes after Swedish customs called a meeting with PostNord to address the loss of billions of kronor due to unpaid consumer VAT.
According to The Local.se, unclear rules meant the customs agency and PostNord had different interpretations of legislation, so PostNord was delivering out parcels from countries outside the EU and worth less than €22 ($27 USD) to shoppers without asking them to pay VAT.
The VAT will be paid from the first krone on items ordered outside the EU, says PostNord Chief Communications Manager, Thomas Backteman:
"PostNord [will] speedily ensure that we are building a system of charging VAT on the goods from the first krona. The customs office wants a report on March 1.
"It will be significantly more expensive for those who trade…If we say that 120,000 packages a day are subject to new fees, you can quickly figure out that it's a significant income”.
PostNord will also charge an administration fee per package and the buyer will pay both VAT and administration fee even if the product only costs 10 kronor (€1 or $1.20 USD) – like items from popular Chinese websites AliExpress and Wish.
When asked if the fee will be 125 kronor (€12 or $15 USD), the current administration fee PostNord charges on VAT and customs duty collection, the company said a decision had not been made.
"There is going to be a fee, and in relation to the value of these mail order items of very, very little value, it will be significant”
According to Backteman, delivery times will also be affected due to PostNord’s new policy.
Swedish Customs urged consumers to become more aware of their obligations:
"Ultimately, it is always the consumer's responsibility to pay VAT on this type of goods. They have to be aware that it is going to become more expensive to order goods from non-EU countries”
Typically, US and UK brands who sell across borders include duties and tax in the online pricing instead of asking the customers to pay at the door. As China-based brands become popular and start selling global, at some point retailers need to consider the impact of including duties and taxes has on conversion and on the customer experience.