Blümel: Targeted controls to combat understated invoices will create fairness for domestic retailers
Customs, Retail Association and Austrian Post in alliance – abolition of EUR 22 tax exemption threshold for packages originating from third countries within a year
With effect from 1 July 2021, the tax exemption threshold for online orders below a value of EUR 22 will finally be a thing of the past. "The implementation measures are ongoing at all levels," reports Finance Minister Gernot Blümel, expressing satisfaction at the cooperation with the Retail Association and Austrian Post. "We are acting together against the distortion of competition and ensuring fair trading conditions for all businesses. Removal of the tax exemption threshold will also eliminate a longstanding disadvantage suffered by domestic retailers. Particularly in the case of packages from Asia, it is striking that these are often sent with a value of below EUR 22," explains Blümel.
At present, consignments up to EUR 22 originating through distance selling from non-EU countries are still eligible for delivery without collection of any tax. With so-called "small packets", no import VAT is payable, which leaves domestic retailers trailing compared with online retailers from third countries. Above all, cheap shipped products from China are distributed at low cost in this way. Consignments are often incorrectly declared by Asian retailers, and the exemption threshold provision is thereby unlawfully exploited.
"We want fairness and fair taxation in Austria, as well as competitive equality between the traditional and digital economies. Through enhanced cooperation and setting a specific focus, in future we will take aim at imports of small consignments from third countries with even more determination than before. In this way, we are protecting the interests of Austrian businesses and taking targeted action against intentional undercharging," declared Finance Minister Blümel, announcing corresponding targeted controls at customs.
Removal of import VAT exemption threshold with effect from 1 July 2021
Thus, in just under one year from now, with removal of the input VAT exemption threshold, from 1 July 2021 all consignments will be subject to a customs declaration by the retailer, whereby a declaration will have to be made and taxes paid. In order to support Austrian retailers, who are suffering particularly from the current understatement of invoices from third countries, during the period up to actual introduction of the new measures, the Austrian Finance Ministry has adopted a corresponding package of measures.
With immediate effect, the customs administration will carry out targeted monthly controls on small consignments from third countries. Risk management will be improved on an ongoing basis using risk profiles, both within the IT systems of the customs administration and also at Austrian Post; this will lead to enhanced identification of understated invoices. Thanks to the cooperation between Austrian Post and the Austrian customs administration, Austria will be well prepared for the introduction of blanket taxation on import consignments.
With regard to focused operations, customs supervision operations will in future increasingly target understated invoices, consignments declared as gifts, false indications of country of origin, and prohibited and restricted goods. Here, the customs administration's x-ray machines, as well as service dogs, will be deployed in tried-and-tested-fashion.
In order to further protect and promote fair taxation for Austrian retailers, building on the findings relating to retailers from third countries, new risk profiles will be developed for controls and, in addition, sales by EU retailers will be observed to assess whether they have exceeded the threshold limit and if they have paid Austrian input VAT. Added to this will be targeted risk analyses, which will become possible through the transmission of more and more data from distance-selling activities. Using new risk profiles generated in this way, the customs administration will be able to undertake its control operations even more efficiently.
"It is a precept of fairness that all market participants should be on an equal footing from a tax perspective. Through a close alliance, a bundle of measures, plus targeted controls, have been agreed in order to ensure fair play in e-commerce. This will serve to structurally counteract improper use of the EUR 22 exemption threshold by international webshops from third countries. The additional annual revenues of EUR 150 million generated as a result of taxation from the very first cent are needed by our national economy today more than ever," added Rainer Will, Managing Director of the Austrian Retail Association.
"Austrian Post will ensure that the delivery process for both national and international package consignments will continue smoothly in future," affirmed Georg Pölzl, CEO of Austrian Post. "Of course, Austrian Post also attaches importance to supporting the Austrian retail trade and being a strong logistics partner – something in which we have succeeded, not least due to the successful development of Austrian distance-selling platform Shöpping."