In July 2021, the European Commission introduced new value-added taxes (VAT) rules, which renders all imported goods from non-EU sellers, such as AliExpress, taxable irrespective of their value.
Before this, imports equal to or less than €22 were exempt from VAT.
AliExpress has announced that it will be collecting VAT from its EU customers for orders equal to or less than €150 and £135.
This might affect your shopping experience and e-commerce business significantly.
Here’s everything you need to know about AliExpress VAT for EU and UK consumers.
- Key Terms You Need To Know
- AliExpress VAT rules for packages Imported into Europe
- AliExpress VAT rules for packages Imported into The UK
- The New VAT for Europeans: What Has Changed For AliExpress Shoppers?
- What If AliExpress Orders Are Shipped From EU and UK warehouses?
- AliExpress Refund Policy: Is VAT Refundable?
- How To Get a VAT Refund If You Were Taxed Twice by AliExpress and Local Customs?
Key Terms You Need To Know
Value-Added Tax (VAT)
VAT is a consumption-based tax that applies to all goods and services, both tangible and intangible, traded for consumption within the borders of the European Union.
It is only applicable to individuals who are importing for their own consumption. People who make imports on behalf of the company they work at for example are exempt from the VAT collection by AliExpress.
That is to say, all goods imported to the EU from a foreign seller or a foreign marketplace are subject to VAT, whereas goods exported to customers outside the EU are not normally subject to VAT.
The tax is paid by the consumer, also known as the buyer, but the seller is considered the “taxable person” because they are responsible for remitting the collected taxes to the concerned tax authorities.
VAT is collected in every transaction made before the final product reaches the final consumer.
Buyers who’ve paid VAT when buying raw materials can deduct the amount they paid when they sell their products. This process is referred to as fractional collection of VAT.
It is meant to ensure the neutrality of the tax regardless of how many transactions are involved.
The Import One-Stop Shop (IOSS)
The IOSS was launched for e-commerce businesses and sellers to collect, declare, and remit their VAT obligations for online sales of imported goods.
As of 1 April 2021, EU member state businesses can register on the IOSS portal and obtain the IOSS VAT identification number. The IOSS number consists of 12 alphanumeric characters.
Businesses outside the EU member states will have to appoint and EU-established middle main to finish the VAT requriements on there behalf.
This electronic portal is targeted at electronic sellers and marketplaces, such as AliExpress, that have customers in the European Union.
When the seller doesn’t use IOSS, the buyer has to pay the VAT and a customs clearance fee.
For all disputes and problems regarding VAT, taxpayers are advised to have recourse to means of redress such as SOLVIT.
SOLVIT is an online service provided by the EU, Iceland, Norway, and Liechtenstein with the goal of reinforcing your rights as an individual or a business.
It aims to resolve any VAT-related issues and find solutions within 10 weeks.
AliExpress VAT rules for packages Imported into Europe
As of July 2021, AliExpress has started collecting VAT on all orders shipped to a member state of the EU.
If you live in the EU, you will see “VAT added at payment” under each item on AliExpress.
However, the VAT can be included in the price by the seller. In this case, you shouldn’t pay any extra taxes.
If the seller doesn’t explicitly state that the VAT is included, contact them and inquire about any taxes or customs duties that you have to pay.
The VAT rates vary depending on each member state. The European Commission states that each state has standard and reduced rates.
Standard EU VAT rates apply to all non-exempt goods and services, and it stands at a minimum of 15% of the taxable amount (article 98 of the common system of value added tax)
There is no maximum for the standard rate, and each member state is free to set its own.
Find your country’s detailed standard and reduced VAT rates in the European Commission’s VAT rates list.
When it comes to reduced rates, member states can apply one or two, and they must be equal to or above 5%.
These reduced rates are only applicable to eligible goods and services listed below (Annex III)
AliExpress VAT rules for packages Imported into The UK
Importing goods into the UK from a foreign state may require you to pay VAT. The goods you import from AliExpress determine whether you should pay VAT at all, and if so, at what rate.
Just like in the EU, some goods are subject to standard VAT rates whereas others are eligible for reduced VAT rates in the UK.
What’s more, the UK also has zero rates for certain goods.
In the UK, most AliExpress products are subject to a 20% VAT rate as a standard rate. The reduced VAT rate is equal to 5% and it’s only applicable to certain goods such as children’s car seats, artworks, and artifacts.
Products such as foods and children’s clothes are exempt from the VAT and are eligible for a zero rate VAT.
When shopping at AliExpress from the UK, you will be required to pay your VAT obligations if your order is equal to or less than £135.
£135 is also the threshold at which UK citizens are required to pay customs duties for their imports.
For orders that exceed £135 of value, the buyer will be required to pay VAT in addition to customs duties, which are only applied on imports that are over £135.
Yet while VAT is not collected for orders under £135, UK citizens will still be required to do customs clearance.
The New VAT for Europeans: What Has Changed For AliExpress Shoppers?
The new EU VAT rules bring changes to your shopping experience at AliExpress, such as faster and easier imports and less involvement of customs in orders less than €150.
Prior to the latest VAT regulations, EU shoppers paid VAT only on items that were equal to or more than €22.
To verify that your items are exempt from VAT based on their value (less than €22), the authorities had to do customs clearance where they ensure that the imported goods are legal and correctly valued.
The new VAT regulations abolished the €22 threshold, making all imports subject to VAT.
AliExpress, however, will not collect VAT on orders that are equal to or above €150.
The shopper will have to pay their VAT plus customs duties for orders equal to or above €150 at the time of import. Otherwise, the packages may be detained by the customs authorities.
And following the new regulations, all AliExpress sellers are now required to include the AliExpress IOSS number in their import declaration into the EU.
When AliExpress sellers add the IOSS number to your package, the customs will not detain them nor will they charge you with VAT or any other customs fees.
What If AliExpress Orders Are Shipped From EU and UK warehouses?
AliExpress has warehouses in several EU countries with the help of Cainiao, the majority-owned logistics company. There are currently AliExpress warehouses in Spain, France, Poland, the Czech Republic, the UK, Germany, and Italy.
Orders shipped from AliExpress EU warehouses are subject to VAT. This is because while the selling point is within the EU, the sellers are still non-EU citizens and traders.
Orders shipped from AliExpress UK warehouses are also subject to VAT since the seller is a non-UK citizen.
AliExpress Refund Policy: Is VAT Refundable?
There are many reasons why you might request a refund at AliExpress. Such reasons could be not receiving your order on time, not receiving your order at all, receiving a mismatched or damaged order, or receiving a counterfeit product.
Generally, you and the seller can agree to make a refund, either partial or full, without the involvement of AliExpress.
If you fail to reach an agreement on the amount of refund or if a refund is possible at all, you can escalate your claim to AliExpress.
To request a refund on AliExpress, you should:
- Initiate a dispute by selecting the concerned order and clicking “Open Dispute” from the “My Orders” page.
- You and the seller negotiate an agreement.
- If no agreement is reached, AliExpress Case Management Team will intervene to study your dispute.
- The Case Management Team will generally reach a resolution within 48 hours.
But will you get a VAT refund on AliExpress?
If AliExpress determines that you are eligible for a full refund, you will receive the total amount that you have paid at checkout, including any VAT.
However, any taxes or duties incurred by the customs or the logistics company are not refundable by AliExpress.
If you are eligible for a partial refund, the amount you receive may or may not include the VAT you paid. You will be able to set the amount of your claim before initiating the dispute, so make sure you cover your VAT too.
How To Get a VAT Refund If You Were Taxed Twice by AliExpress and Local Customs?
When you pay VAT at check-out on AliExpress, you are automatically exempt from paying any additional taxes or duties to your local customs when you receive your packages.
Remember that this is only true for orders under €150 in the EU and £135 in the UK.
If your customs charged you VAT after it was collected by AliExpress, you are entitled to a refund by AliExpress.
To get a VAT refund on AliExpress, you should:
- Contact AliExpress customer service
- Provide the invoice of import VAT issued by your logistics provider
- Provide proof of payment of that invoice (that you have paid VAT to your customs)
- Provide any customs documentation on the release of goods and the shipping label of the package
AliExpress is now collecting VAT on behalf of tax authorities in the EU and UK. However, for orders equal to or above €150 in the EU and £135 in the UK, AliExpress will not collect any VAT.
In this case, the buyer is required to pay VAT and any other customs duties upon the arrival of their packages. They are also responsible for customs clearance.
VAT rates in the EU range from 17% in Luxembourg to 27% in Hungary with reduced rates reaching 5% for eligible items.
In the UK, VAT is set to 20% on almost every imported package from outside of the UK.
Moreover, orders shipped from EU and Uk warehouses are also subject to VAT because ALiExpress, is considered a foreign seller.
AliExpress might include the VAT amount in the item’s price or notify you that you will be charged a given VAT rate at checkout.
To avoid any ambiguities or misunderstandings, always contact the seller before making any payments.