To work as a dropshipper, it is possible to choose between different statutes. The self-employed status allows you to benefit from a VAT exemption on imports when dropshipping. How to avoid paying import VAT when dropshipping? There are a few techniques that can help you get around the situation and not pay any VAT.
Mastering the principle of VAT on dropshipping imports
Dropshipping is an e-commerce activity that allows an online merchant to sell their products more effectively. He will not have to stock products and therefore does not need a substantial start-up fund. All they need is a website to sell their goods. Like other online retailers, the dropshipper must pay VAT and customs duties if he is sourcing goods from a supplier outside the European Union.
How can I avoid paying VAT when dropshipping? It's a possibility you can consider, provided you know and understand the principle of dropshipping and VAT. First of all, it's essential to understand when you have to pay VAT and customs duties. However, since 2021, dropshippers have been liable to pay VAT, but not customs duties, which will be paid by their customers.
When a trader orders goods from EU countries, he will not have to pay any tax and his customer will be charged according to the tax rate of his country. This will be the reverse charge mechanism that comes into play. But only if his company is also registered in the EU. On the other hand, when he uses a supplier from outside the EU, i.e. he is dropshipping, his goods will essentially go through customs.
Avoiding VAT legally when dropshipping: some possibilities
To avoid customs duties when drophipping, you need to register in the EU and carry out your transactions in Europe. VAT problems arise mainly when you use a supplier who is not located in an EU country, but in a non-EU country. When you place your order in Asia, for example, you'll have to deal with customs and VAT issues. Unlike orders from Spain or Germany, for example.
If you have a status other than self-employed, you may want to know the tricks to avoid paying import VAT when dropshipping.
- Buying goods in small packages
This is a legal and very simple option that allows you to avoid customs fees. You can make your orders in small packages rather than in large ones. This is so that you don't quickly cross the €150 threshold. However, this may mean that you have to pay transport costs on a recurring basis.
- Ordering products on foreign platforms
To avoid taxes, you can also order your goods via foreign platforms. These include Alibaba and AliExpress. However, make sure that the price of a parcel does not exceed 150 euros. In this case, the product may be more expensive than if you buy it in an EU country with customs duties and other taxes.
- Shopping from a European warehouse
Various companies already allow you to take advantage of this possibility. You will have imported goods, but via a warehouse in Europe. This means that there is an intermediary who takes care of shipping the goods from the exporting country.
- Not stating the exact value of its products
Another trick is not to mention the exact price, even if it is not legal. By indicating a false value, one will thus deceive the customs. Since customs will not be able to determine the price of the goods if they do not open the package, this can be considered. However, this presents a significant risk that should not be minimised.
Paying VAT in dropshipping as an entrepreneur
If you position yourself as a dropshipping product importer and operate as an autoentrepreneur, you are not generally liable for VAT. The procedures for setting up a business as an autoentrepreneur are particularly streamlined in order to encourage young people and project owners to start up.
VAT on dropshipping imports for a self-employed entrepreneur is normally paid by the end customer or the service provider who handles the delivery. However, a dropshipping self-employed entrepreneur may be liable for VAT if his turnover exceeds a certain threshold. In this case, he will have to charge 20% VAT on each of his sales.
In order to know more about this, you need to know about import duties for dropshipping. These are customs duties and VAT. These values can have an impact on your sales and therefore on your turnover.
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