Brexit: The UK (British) exit from the common market of the EU finally took effect at the end of 2020 under an agreement that neither particularly liked. Still, this agreement was better than no agreement on the terms between the UK and the EU. At the same time, the UK instituted new regimes for sales tax — VAT — and duties on inbound goods. As of January 1, 2021, the tax regime changed, making all items subject to VAT. As paperwork required for transit of goods between the EU and the UK caused delays and confusion, imports and exports decreased. It isn’t clear how much of the decrease was due to COVID restrictions and how much was due to the new tax and customs requirement. Some items not subject to customs duties are subject to VAT. It is clear that the tax and customs enforcement did account for some portion of the decrease. This may be an indicator of what will happen when the EU introduces similar measures, discussed below.

USPS Export Compliance, which was suspended earlier this year, will likely restart soon and possibly before publication of this article. (The date has not been announced.) Export Compliance confirms that the required data is submitted electronically for articles requiring customs information as part of the Shipping Services File (SSF). Non-compliant mail will be returned to the sender. The requirements are in USPS Publication 199. Changes Inside and Outside the US Continue to Impact Changes in the laws of foreign countries that affect inbound or outbound mail can be difficult for mailers and shippers to track if the country making the change doesn’t publicize it to other countries. The major changes in 2021 have been in Europe and the US. With 27 countries in the EU, including some major US trading partners, European Union (EU) changes in regulations and enforcement can have a major impact on US mailers.

tives, so there are variations from country to country. There are rumors and questions about whether some or all EU countries will require items that USPS designates as conditional, particularly the World Customs Organization’s Harmonized System (HS) Code or Number which are required on commercial, but not postal, customs forms. (HS Code information is available from the US government at https://www. trade.gov/harmonized-system-hs-codes.) The recipient’s email or phone number may ease the delivery process if VAT or customs duty needs to be collected. EU VAT: The 27 countries of the EU join those imposing sales taxes on July 1. Since each item would be assessed for VAT, customs enforcement is likely to tighten. The specifics of VAT rates and exemptions vary between countries, as each country enacts its own regulations and restrictions. For items from outside the EU, VAT will be collected with duty from the recipient. Registration in a single country under the Import One-Stop Shop (IOSS) covers all the EU countries. Although some countries have said they will not be prepared and the EU cooperative of public postal operators requested a delay, it seems likely enforcement will begin July 1. (More information is at https://ec.europa.eu/taxation_customs/business/vat/ ioss_en.) Duty and VAT may be collected by the postal operator in the recipient’s country for an additional fee if it is not paid by the sender. Altogether, these changes — documentation requirements, higher postage, stricter customs enforcement, sales tax charges — may lead to slower delivery and a temporary decrease in cross-border e-commerce orders. Or it many simply move cross-border fulfillment into other non-postal channels. Larger companies, with greater resources, may have a temporary advantage over smaller companies until new third-party solutions appear. Businesses like stability. There are no indications we will see it soon. 

Export Compliance confirms that the required data is submitted electronically for articles requiring customs information as part of the Shipping Services File (SSF). These regulations apply to goods arriving from the US by mail or by other carriers. While customs forms and reporting were in place for US mailers and shippers before this, the VAT payment requirements are new and require registration with the UK tax authorities (https://www.gov.uk/vat-registration/when-to-register, and scroll down to “Businesses Outside the UK”). If duty is not paid by the sender (DDP), it is collected from the recipient. Postal items do not usually have an option to pay the duty in advance and goods are with unpaid duty (DDU). Duty is collected from the recipient. EU customs: Beginning in March 2021, new regulations and procedures under ICS2 were implemented for goods entering the EU, including more rigorous AED, and customs duties with a lowered de minimis, the starting amount for duty payment. Each of the 27 countries in the EU enact their own laws to implement EU direc-

Merry Law is President of WorldVu LLC and the editor of Guide to Worldwide Postal-Code and Address Formats. She is a member of the UPU’s Addressing Work Group and of the U.S. International Postal and Delivery Services Federal Advisory Committee. MailingSystemsTechnology.com | JULY-AUGUST 2021

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