Package being delivered; illustrative photo by RoseBox رز باکس on Unsplash

ALL packages sent to Czech Republic from outside the EU to be subject to VAT

VAT exemption on packages under 560 crowns will be abolished from 2021, meaning all incoming goods will pass through customs

In the European Union, the price of all goods shipped between member states is inclusive of value-added tax (VAT). This ensures that a proper amount of tax has been collected for each sale and that delivery between countries can be processed expediently without having to pass through customs.

But the same is not true for goods shipped from outside the EU. In the Czech Republic, all incoming packages valued above 560 crowns (€22) must go through a (sometimes lengthy) customs process in which both VAT and processing fees are levied.

Packages coming into the Czech Republic under 560 crowns are currently exempt from VAT, meaning they skip the customs process and no tax is charged.

But from 2021, that will no longer be the case: under a new EU directive finalized last year, all packages shipped from outside the EU are to be subject to VAT.

Today, the Czech Ministry of Finance submitted legislation in compliance with the new EU regulations, to take effect from January 1, 2021.

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According to Finance Minister Alena Schillerová, the new law will make it more difficult for individuals and companies to evade paying VAT.

“The current situation directly leads to a fictitious underestimation of goods, so that their price does not exceed the limit of 22 euros, and the consignment does not have to be taxed,” she told local members of the press.

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But others claim that the new legislation may cost the government more than is actually collected.

“It is totally absurd and uneconomical to require that any small consignment, including one under one dollar, be subject to customs clearance,” Martin Pánek, director of the NGO Liberální institut (Liberal Institute), told local media.

“The work of the parties involved – the consignee, the customs officer, and the postal workers – costs far more than how much VAT is collected on the consignment.”

“Completely removing this boundary makes no sense. Large stores like AliExpress can handle the new situation. However, this is not to be expected from small websites that send a T-shirt and stickers to subscribers for an annual subscription.”

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Until 2011, packages sent to the Czech Republic valued at under 3800 crowns were exempt from VAT.

According to Czech Post, a total of 28 million packages from non-EU countries valued at less than 560 crowns arrived in the Czech Republic last year.

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