CW at German Chamber Spring Reception 2021

From 21 to 22 April 2021, the German Chamber of Commerce Southwest China held its 2021 spring reception in Shenzhen and Guangzhou. More than 110 members and friends gathered and spent two pleasant evenings. CW German Desk Business Advisor , Therese Feng, had the honour to attend it on 22 April 2021 in Guangzhou, together with Phenix Zheng, Manager (FDI Legal Counsel) from our China Consultancy Team.

Written by Therese Feng, German Desk, CW CPA

Newsletter

E-Commerce

E-commerce in the European Union and its VAT changes in 2021

  • The European Union will implement new Value Added Tax (VAT) regulations on cross-border e-commerce businesses on 1 July 2021. Due to the increase in globalization, international trade and the need for worldwide tax controls, the new regulation aims to simplify and modernize the procedures.   

    How will this affect exporters from China? How can you regulate your sales in EU? 

In response to the increase in globalization, international trade, and the need for worldwide tax controls, on 1 July 2021, the European Union will enact the new regulatory package of Value Added Tax (VAT) on e-commerce.    

The package introduces the ‘Import One-Stop Shop’ electronic portal, which regulates the payments of e-commerce VAT in each member state. This change concerns the growth of e-commerce and digitalization, which have boosted international trade; Companies based in the European Union selling online can also export to mainland China and Hong Kong, and vice versa. 

 

KEY CHANGES IN VAT REGULATIONS  

  • Changes in VAT declaration   

The regulation includes an important change of the VAT collection method on e-commerce. Previously, VAT was paid in each European Union member state, depending on the seller’s location. To illustrate, if a seller in Germany sells products online to a Spanish client, VAT would be declared and taxed in origin, Germany.   

As of 1 July, 2021, tax will be declared in the state where the buyer is located and the purchase is made. Hence, in the previous example, the VAT declaration would be made in Spain. This regulation also affects sellers outside the European Union.  

  • Exemptions of the VAT   

The current system permits VAT exemptions on products imported to EU which are less than €22, while those products exporting from EU are still subject to VAT. This exemption makes imported products more competitive in terms of price compared to those of European origin.    

The regulations as of 1 July will eliminate the e-commerce VAT exemption for products with a value of less than €22, which implies that all imports to EU, even those of little value, will be charged VAT at the destination. This is one of the most supported initiatives since it can balance the playing field between imported products and local products.   

Meanwhile, imports of products with a value of less than €150 are still not subject to customs duties and do not require a full customs declaration. 

 

IMPLICATIONS FOR ONLINE SELLERS FROM MAINLAND CHINA OR HONG KONG  

The different online platforms and marketplaces are contemplated in this regulation as these platforms are, by far, the most used vehicles for the sale of online products from overseas, including China and other parts of Asia. On behalf of users and buyers, the platforms will act as guardians of compliance with the e-commerce VAT, which especially includes those outside the European Union member states and that import from non-member countries.  

Although the general concern for exporters whose sales cover the entire EU territory is how to make the declaration in multiple states, the ‘Import One Stop Shop’ records, and files all declarations across the EU. On the contrary, if the seller does not want to use the ‘Import One Stop Shop’, the alternative is to allow the final consumer to pay VAT when the product is delivered, and all responsibilities and declarations rest on the consumers.  

The foreign trade community is concerned about the increase in costs borne by the final consumers. As VAT is an indirect tax, it is transferable to final consumers. For example, a European consumer who initially purchases a product imported from China valued at €20 may have to pay €24.2 for the same product in Spain after the implementation on 1 July 2021.  

There is a worldwide trend for regulation of VAT on imports. To demonstrate, some cross-border trading platforms in China require companies that ship products to pay VAT in advance for all merchandise.   

How quickly will the final consumers adapt to the VAT regulations of electronic commerce in the European Union, especially in pandemic times? It is only a matter of time the end consumers adapt to these changes.   

Written by Luz Deneb Martínez, Latin Department, CW CPA

Newsletter

Sino-German Business Updates

Sino-German Business Updates – November 2020

Siemens Healthineers Unveils Range of Cutting-edge Tech at CIIE 

The third China International Import Expo (CIIE) was held from 5 to 10 November 2020. It was an ideal platform for enterprises to network in China and seize new opportunities. At CIIE, German medical technology company, Siemens Healthineers, unveiled a range of cutting-edge technologies, innovative products, and total solutions, including a fever-clinic solution and an interventional surgery robot called Corindus, which made its China debut. 

 

German Automaker Daimler Underlines Chinas Role and Importance 

From 11 to 13 November 2020, the China Development Forum was held in Beijing under “Economic Recovery and International Cooperation in a Post-Pandemic Era”. At the forum, Daimler AG, the parent company of Mercedes-Benz, underlined China’s role and importance for the global economy as well as the automotive industry. 

Newsletter

Sino-German Business Updates – October 2020

Xi Jinping’s message on opening-up meets with warm response by the German Chamber 

President Xi Jinping delivered speech at the gathering marking the 40th anniversary of the Shenzhen Special Economic Zone on 14 October 2020, which has been warmly greeted by audiences from all walks of life, especially the local German Chamber community. 

“Foreign companies’ expertise and experience have been indispensable for China’s growth over decades,” said Maximilian Butek, delegate and chief representative of the Delegation of German Industry and Commerce Guangzhou. 

China is Germany’s most important trading partner and German companies are committed to the market, he said. “We are all eager to sustain and strengthen existing partnerships.” 

 

2020 China-Germany Automobile Conference Successfully Held 

The 2020 China-Germany Automobile Conference was held from 13 to 16 October 2020. The conference set its main venues in Changchun, Jilin, Changsha, and Hunan as well as other venues in Ingolstadt and Dusseldorf of Germany. 

The Chinese and German auto sectors have close, long-standing ties, and this year’s conference has attracted more than 400 participants including company representatives, government officials, and experts from the two countries, discussing a wide range of topics, including industry cooperation and future technologies. 

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For cooperation and inquiry about our German Desk, please feel free to contact Ms. Therese Feng (therese.feng@cwhkcpa.com).