The VAT loophole Low Value Consignment Relief (LVCR) EU scheme that still exists in Europe is set to be closed.
The British Government banned it from the Channel Islands in April 2012 because it was distorting trade and costing the exchequer many millions of pounds in lost VAT payments and European businesses up to EUR4.5bn in turnover annually.
As it stands today, you can use LVCR to ship product from the Channel Islands to any EU country apart from the UK and avoid paying VAT/sales tax to the respective governments so long as the sale is under EUR22.
Now the relief could be abolished from the EU statute books in 2016.
The proposed total closure of the loophole, which coincides with a new single electronic registration and payment system similar to that already in place for digital downloads, is intended to put paid to non-EU-based fulfilment firms continuing to profit from VAT-free imports into the UK and the rest of Europe.
Thompson & Morgan, Tesco, HMV, Amazon, Play.com and Blahdvd have either moved to other non-EU locations, sold their business, closed down or continued to trade under a new brand since 2012.
Channel Islands growers such as Jersey Plants Direct and Raymond Evison, as well as firms circular shipping plants via the Channel Islands into Europe, will now have to pay VAT on exports to the rest of the EU.