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EXPLAINED: The new rules on VAT on parcels in France

Since July 1st, people receiving packages shipped to France from outside the EU - which, of course, now includes the UK - may have noticed some surprising new charges.

EXPLAINED: The new rules on VAT on parcels in France
Photo: Stephane du Sakatin/AFP

This is because of new EU regulations, which mean you now have to pay Value Added Tax (VAT or TVA in France) to receive even small low-value parcels shipped from outside the bloc. 

What exactly is going on?

Until June 30th, 2021, packages imported into the EU with a value of less than €22 were exempt from import VAT charges. This exemption was abolished on July 1st, meaning that VAT is now due on all goods imported into the bloc, applied from the very first euro. 

The EU says the change was made to combat fraud via the widespread under-reporting of the value of imported goods in order to dodge the tax, as well as to make things fairer for companies trading within the EU.

It was supposed to come into effect from the start of January but was pushed back to July because of pandemic-related delays.

The rule is just one part of a raft of reforms designed to update the EU’s systems and bring them in line with 21st-century global trading practices, where international e-commerce accounts for a large chunk of the market.

Does this have anything to do with Brexit?

It doesn’t have anything to do with Brexit directly, but of course if the UK had not left the EU then these charges would not apply to packages sent between France and the UK, since that would have been an inter-EU delivery.

But the abolition of the €22 ‘low value consignment’ threshold that kicked in from the beginning of July is an EU-wide regulation which applies to imports from every non-EU country – the USA, Canada, Australia, India and the UK to name but a few.

How is the VAT charge calculated? Does it vary depending on where the package is sent from?

The VAT rate you will be charged is the one applicable in the country where the items are delivered. This means that if, for example, you’re receiving a package shipped from the UK to France, you’ll pay the French VAT rate.

Each EU country has its own VAT rates for different items. 

VAT in mainland France is typically set at 20 percent, with special reductions to 5.5 percent for various food items and for certain books, as well as a super-reduced rate of 2.1 percent for certain pharmaceuticals. 

What about gifts sent from outside the EU? 

The new changes officially concern only commercial goods.

According to the EU’s taxation and customs union, gifts and personal packages valued at less than €45 remain VAT-exempt, although some people have reported receiving unexpected charges for personal packages despite this regulation.

Bear in mind, however, that anything sent from outside the EU – even a little birthday gift or package from home – needs a customs declaration form attacked. Certainly items including foodstuffs like chocolate are banned. Full details here.

How do I pay these fees in France?

According to La Poste, you can pay any VAT,  customs duties, and customs clearance fees either before or upon delivery. 

Paying online in advance via La Poste’s secure site enables you to access reduced customs clearance fees. To do this, you’ll need a consignment number or delivery notice. 

You can also pay the fees by cheque or cash upon receipt of the package, or by card, cheque, or cash in your local post office.

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MONEY

Reader Question: Why did my French electricity bill increase by more than 4%?

The French government has capped electricity prices rises at four percent - but as with many French rules, there are certain exceptions.

Reader Question: Why did my French electricity bill increase by more than 4%?

Question: I read in the media that electricity prices in France are capped at four percent, but I just got a letter from EDF telling me that my bill is going up by almost 20 percent – is this a mistake?

The French government’s bouclier tarifaire (tariff shield), froze gas prices at 2021 levels and capped electricity price hikes to four percent – it remain in place until at least the end of 2022.

However, there are some customers who will see increases to their bills of more than that – here’s why: 

The regulated tariff rate

The French government involvement in price-setting doesn’t just happen during periods of energy crisis, normally regulated tariff prices are updated twice a year: usually on February 1st and August 1st.

Typically, this value is calculated by the CRE (commission de régulation de l’énergie) and it is based on several different factors, which are explained on this government website. These tariffs proposed by the CRE are then subject to approval by the ministers in charge of energy and the economy.

READ MORE: EXPLAINED: Why are French energy prices capped?

These affect the state-owned Engie (formerly Gaz de France), the mostly state-owned EDF and some local distribution companies. Around 70 percent of people in France get their electricity from EDF but other suppliers do exist in the market.

These alternative suppliers, like Direct-Énergie, Total Spring or Antargaz, are free to charge more – but don’t usually charge much above the EDF rates for obvious commercial reasons.

Basic rate

The government-set limit in price rises refers only to the basic rate (option base) for electricity.

This plan represents over 80 percent of the 32 million households connected to the electricity grid in France. So, there is a good chance you might be subscribed to this without even realising it. 

If you are on the basic tariff rate, your bill will not increase by more than four percent this year.

Other tariff options

However, other options for electricity bills do exist, including off-peak rates, green deals and fixed energy prices for a certain period.

Typically people who sign up for these will have been paying less for their electricity in the preceding months than those on the base rate.

However, there are certain special deals that are not covered by the four percent cap, and some users will find that their deal period has come to an end, they are then shifted onto the base rate – which is likely to represent a price increase for them of more than four percent.

It’s little consolation when faced with rising bills, but you will likely have been paying significantly less than customers who have been in the base rate for the past few years.

READ MORE: French government to continue energy price freeze until at least 2023

Kilowatt price

Because most electricity price plans are bafflingly complicated, the easiest way to compare is to look at the price per kilowatt-hour.

Your electricity bill consists of a fixed part, the monthly subscription (abonnement) and the variable part, which depends on the quantity of electricity consumed (in euro per kilowatt-hour, kWh). The latter part is what is concerned by the tariff shield of four percent.

Here is an example of what that might look like:

The mid-August base rate price per kilowatt-hour is €0.1740/ kWh, so if you’re with EDF they cannot charge you more than this rate.

Other EDF plans charge significantly less than that – for example the Vert Electrique Weekend deal has been charging €0.1080/kWh on weekends and €0.1434/kWh on weekdays. 

Bill rises

With the tariff shield, the average resident customer on the base rate will see a €38 rise on their bill this year, while professional customers will see an average of €60 rise. 

Without the tariff shield, electricity prices per residential (non-business) customer would likely have increased an average of €330 a year, according to the CRE.

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