Relating to last week article on “Government wanting a piece of the eCommerce pie”. This week we can see it in action with PostNord. Swedish Customs now require VAT collection on items that come from outside the EU Customs Union from the first Swedish Krona (SEK). PostNord have revised its admin fee to accommodate the changes. The collection of VAT on imported items comes into effect on 1st March.
In addition to VAT collection, Post Nord will also charge an admin fee to collect the VAT from the customer on the door step. Before these changes, VAT was only charged on goods over the equivalent to 22 euro (220.28 SEK or $27.09 USD). Post Nord also made a 125 SEK ($15 USD) charge to collect any relevant duties and taxes. With the new regulation, consumers will have to pay 25% VAT (similar to GST) on the cost of the declared value of all the items.
However, PostNord has lessen the VAT impact by revising its admin fee from 125 SEK to 75 SEK ($9.30USD) for items value below 1,500 SEK ($185USD) items with a value equal to or above the value of 1,500 SEK will still be charged at 125 SEK.
Based on my analysis, the greatest effect will be on low value consignments under the new levy. The total consumer cost increased by 100 Krona ($12.30 USD) or 100% for a 100 Krona item value. The effect is lesser as the item value increases. For example, 200 Krona ($36.9 USD) item value, the consumer cost increase at 63%. Between 22 euro (220.28 SEK or $27.09 USD) and 1500 SEK ($185 USD), VAT effect is indifferent on “Before” and “After” as it applies to both scenarios. However, due to PostNord reduction in admin fee we can see positive effect of a 10% decrease in consumer cost.
The impact on our own exports to Sweden will be significant with the average cost of Ecommerce items from our region being between $10 - $20 USD (81.36 – 162.73 SEK) the cost for Swedish consumers will increase significantly making importing our products less attractive.
Commentary by Maverick Chung
Sweden Customs, http://www.tullverket.se/en/private/receivingorsendingagift/orderinggoodsonline.4.792224361590183a4d34492.html
PostNord Before revision pricing, https://www.postnord.se/en/receiving/collecting-mail/from-another-country
PostNord After revision pricing, https://www.postnord.com/en/media/press-releases/postnord/2018/new-fee-to-be-levied-on-consignments-from-third-countries-from-march-1/