As the saying goes: “it was fun while it lasted”. I always expected the shopping spree from AliExpress, eBay and friends in China would come to an end one day but did not expect it to go out with such a bang. Today PostNord (they handle snail mail in Sweden) announced they will impose a 125SEK + 25% VAT fee (about €16 in total) on every single parcel arriving from China. I would not mind paying VAT on China imports but I do mind getting robbed by the mail man. Apparently, there is an inflow if 150k Chinese parcels every day in Sweden. PostNord expects that number to drop to 120k/day. Multiplied with 125SEK/parcel, this will lead to “significant income” according to the PostNord spin doctor. I expect not.
Sources: BreakIt.se, Omni.se (Swedish), The Local (English)
How long will it be before other European countries follow Sweden’s lead?
Could China retaliate by using a third country as a staging post?
That is an interesting question. The cheap Chinese imports are problematic and needs fixing for at least two obvious reasons. PostNord of course does not get paid for handling the massive amount of parcels that arrive. I do not know how this works with international agreements but I guess it is based on either an even flow of mail between countries or compensation between national mail carriers. The other reason is that of lost taxes on imports which has now come to our government’s attention. I guess some European countries will follow which opens up for either “staging post countries” as you suggest or “European AliExpress warehouses”.
Are they even allowed to do that, according to international postal contracts?
Deutsche Post only charges such a fee (of nearly 30 Euro) if a parcel doesn’t get through customs in the first run, because of improper declaration and you hand in the documents and let them handle the second attempt for you. You can avoid the fee by picking up the parcel from the customs office yourself.
An interesting question, too. Does Deutsche Post or the German Customs charge VAT and/or import fees on Chinese parcels?
Well, ultimately the fees are charged by the customs office, but for parcels that carry a proper declaration the usual workflow is that Deutsche Post does the customs handling and gets reimbursed by the recipient on delivery of the item without adding a surcharge.
BTW, VAT is only charged for parcels with a value above EUR 22 and import tax is only charged for parcels with a value above EUR 150. That’s why I usually keep my AliExpress orders below EUR22. 🙂
Apparently there is a way for Chinese shippers transship at almost the same price from Hong Kong and Singapore. The traffic is simply going to move. Plus very few of the goods being ordered have locally manufactured substitutes. There is no point to protectionism here.
Indeed. Protectionism was actually one of the reasons, although not mentioned specifically. Apparently some feel bad for Swedish companies importing cheap stuff from China and adding x10 on the local sales price. Consumers importing the same stuff without paying VAT obviously skews the competition. But, no one cared to mention that even if Swedish consumers did pay VAT on Chinese B2C imports, it would still be a lot cheaper. The weirdest thing however is this: the government is furious about us not paying VAT on Chinese B2C imports which is quite funny considering there is no mechanism whatsoever for doing so.
Johan, here’s your answer to the question about international agreements above:
https://www.forbes.com/sites/wadeshepard/2017/11/05/how-the-usps-epacket-gives-postal-subsidies-to-chinese-e-commerce-merchants-to-ship-to-the-usa-cheap/2/#5a32bf653f5d
http://www.ehandel.se/Nya-regler-kommer-ta-bort-gratisposten-ifran-Kina,9498.html
Thanks Jan!
Its a shame that the service from so many Swedish companies is so bad – otherwise I suspect the impact on them would not be so extreme. Why can I order something to Umeå faster with Amazon.co.uk or .de than I can an online shop in Malmö? Even if something shows in stock it seems the standard most online business in Sweden strive for here is to ‘try their best’ to put it in an envelop at some point in the next 3+ working days…. with delivery taking a similar length of time.
Even gifts are being taxed now.
I sent a very small stuffed animal to a friend in Sweden last month, and marked it appropriately as a gift. The toy cost me $10.00 here in the US; my friend just received an email informing her of a $9.17 VAT!
One outcome of all of this will be cessation of gifts.
Ben, gifts between private persons from outside EU with a value below 500 SEK are exempted from customs and other fees:
http://www.tullverket.se/sv/privat/skickaellertaemotengava/allmantomattskickaellertaemotengava.4.792224361590183a4d311c8.html
If they charged your friend, this is an error which can be contested.
Hi Ben, same happened to me. Asked Postnord and they told me, they mixed currencies. I’m wondering what education these poor guys at Postnord get, when they suddenly have to handle custom matters. Some of them might not even know all the non-EU countries and currencies. In Sweden, everything is now Kinapaket. Weird. Staff should not take responsibility for customs handling. There is other people for that ( mostly federal). They should have approriate education and payment, not working on summer-job.
My Swedish friend complained and so they reimbursed her USD $3.
The upswing is, I paid USD $10 for the item, including tax (meaning, the item actually cost me about USD $9) but she had to pay approximately USD $7 to receive my gift.
There are several questions that for me still unclear. One of them — why customers should pay double VAT? Buying online we’re paying VAT of country where purchase were registered, and then on top of that Swedish VAT. Is it legal? B2B customers always have a mechanism to get a refund of that foreign VAT. B2C customers have no such option.
There is a plan to introduce collection of VAT at the point of sale (e.g. Aliexpress, ebay, etc) by 2021, for all post coming outside the EU. Apparently they/we are loosing up to €6 billion yearly, at the EU level. Companies will have to register every purchase and collect VAT as per country of purchase. I’m wondering what will happen in praxis :/ Hopefully, the process will get rid of the import fee(s) and you/we will only have to pay VAT. Anyone interested can read more about it here: http://europa.eu/rapid/press-release_MEMO-16-3746_en.htm