Wednesday, October 13, 2021

VAT on all Packages Now

Within the EU, the price of all goods that are shipped between EU-member states includes VAT.  VAT is value-added tax.  For Americans this is the sales tax.  By including the VAT, countries know that the correct amount of tax has been collected which allows goods to ship without having to go through customs.

This isn't the case for goods shipped in from outside the EU.  Things have to go through customs in order to calculate the VAT and usually some processing fees.  Prior to this month goods valued below 560 Kč (€22) were exempt from VAT.  Well as of 1 October 2021, that exemption is now gone.

This is a good news / bad news sort of thing.  The good news is that the Czech government has somewhat simplified the customs procedure.  The bad news is that now you have to pay the VAT on everything coming in from outside the EU and currently the VAT in Czechland is 21%.  Remember that due to Brexit, the UK is now out of the EU so this applies here too.

This was supposed to rollout across the EU on 1 January 2021 but it was pushed to 1 July to give EU countries time to get ready for it.  The Czechs needed a little longer so it didn't take effect until this month.

If you haven't paid VAT at the point-of-sale then you will need to deal with customs but you can always authorise the delivery provider to handle this for you for a fee.

So now all items under 3800 Kč (€150) are subject to VAT.  Items above 3800 Kč have to go through a separate customs procedure because you have to pay the VAT and you have to pay a separate duty tax which is dependent on the type of product.

This will also impact care packages.  I believe that many people would receive things from outside the EU and no matter what was sent would just declare the value as less than €22 so that they would not have to pay any VAT.  This takes care of that and ensures that the government will get its share of tax revenue.  Česká pošta processed 28 million VAT-exempt packages from outside the EU in 2019 and the Czech government expects this change to generate an additional 182 billion Kč (€7 billion) of revenue each year.

It's been a while since I've even received a care package from back home.  Mainly because the cost of shipping increased so much in the USA.  In 2013, the cost jumped up from $55 to $77.  Who knows what it costs now in 2021?  Plus, I'd much rather receive hand-delivered care packages.

Update:  In November 2022, the postage cost of a 20 lb (9 kg) care package from the USA to Czechland is $115.70, from the USA.

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