In order to avoid any problems with VAT and customs charges in dropshipping, you need to know a few things before you apply for a VAT refund at customs. The possibility of getting a VAT refund depends first on the status you have chosen for your dropshipping business. Then there are eligibility issues and more to discover.
It all depends on the status of your dropshipping business
The recovery of VAT in dropshipping depends mainly on the status of the dropshipper. If we look at the customs duty and VAT in dropshipping of a self-employed entrepreneur, we should know that since 2021, the customs duty and import VAT are paid by the carrier and the final customer. But above a certain threshold, in dropshipping and VAT, a self-employed entrepreneur must charge 20% VAT for each sale he makes if he is taxable. Companies with the status of SARL, SAS, EURL and others must charge VAT from the first euro. But as long as the self-employed entrepreneur or a microenterprise does not exceed the imposed and authorised threshold, it is exempt from VAT.
In dropshipping, declaring VAT to customs is an essential step if you want to reclaim it later. To do this, you will need to apply for an EORI number, which essentially allows you to track and identify the parcel when it is at customs. This number will also allow you to declare the tax to customs. This way you will be in compliance with the law.
Applying for a VAT refund or remission
In order to benefit from a zero-rating, you must submit your application to the regional customs directorate in your area or to other customs service offices open to the public. Your application must be submitted by 31 December of the second year following the payment of your VAT. As a general rule, you have 3 years from the date of notification of the customs debt.
In order to be reimbursed for your customs and VAT dropshipping costs, you must include the following details in your application:
- The tax you wish to refund,
- Your signature or that of your proxy,
- All documents that can justify the amount claimed for reimbursement (invoice and others).
In order to benefit from this refund, the dropshipper must keep a record of the sales transactions he has made by means of invoices. They must have a VAT identification number even if they operate as a self-employed entrepreneur. Before you can reclaim dropshipping VAT from customs, you must declare it.
VAT declaration to customs in dropshipping
How to declare VAT to customs when dropshipping? This is an essential question to answer before you can benefit from a VAT refund at customs. As you know, products and goods imported from outside the EU are subject to VAT. When making this declaration, you must state the nature of the goods and the customs value.
To do this, you need to provide some documentation, including commercial invoices. You should also include details of the goods for each package, or what is known as a 'packing list'. You should remember to include transport documents, import licences and anything else that can tell you about the product specifications.
What are the VAT and Customs charges in dropshipping?
It would also be wise to ask about VAT and customs duties when dropshipping. What about customs duty and VAT when dropshipping as an autoentrepreneur? Essentially, if your supplier is in Europe, you don't need to pay VAT at customs when dropshipping or importing. On the other hand, if your supplier is from another EU country, China for example, as a dropshipper you will have to pay customs and VAT when dropshipping.
When you order from a country outside the EU, you need to think about VAT and customs fees when dropshipping. To find out what percentage you have to pay to customs, you need to take into account the product you are importing. Once your goods arrive at customs, you will receive a message telling you that your package is blocked at customs. To unblock it, you must pay the fee by the authorised deadline.
However, some products will not go through customs controls and will even be exempt from VAT and customs when dropshipping. This is particularly the case for products that you order on AliExpress. If your package is also small, it will be exempt from taxes. In the case of AliExpress, it will simply be marked as a gift. However, you should know that this procedure is not legal.
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