Growing number of goods cleared in Finland despite being transported onwards in Europe

More and more goods ordered online to other countries in the EU are being transported via Finland. The customs clearance of these goods is thus also handled in Finland. In the future, Finland may become even more of a customs clearance hub for online purchases in the EU. That is why Finnish Customs is closely monitoring the clearance volumes.

Under the Union Customs Code, goods purchased online from outside the EU may under certain circumstances be cleared in the first country of arrival in the EU, after which they continue onwards to their destination in so-called free circulation.

At best, hundreds of thousands of online purchases a week are brought into Finland. Usually, these are IOSS purchases, that is, online purchases for which the consumer has paid the VAT to the seller already at the point of purchase. Even though the customs clearance is done in Finland, some of the goods continue onwards to their actual destination.

“One reason for transporting the goods via Finland lies in the well-functioning systems and clear guidance. We are proud of the fact that our smooth national customs processes have been noticed elsewhere, but as the customs clearance volumes are increasing considerably, we are of course closely monitoring the capacity of our systems,” says Jouni Ukko, Director of Customs Clearance.

Aim of the EU Customs Reform is to increase the sellers’ responsibility for products bought online

The EU is a customs union with uniform practices for customs clearance. Most of the customs duties collected by the national customs administrations are directly remitted to the EU. At the moment, there is no obligation to pay customs duty for purchases worth less than 150 euros, so for most of the small consignments ordered online, you only pay VAT. From the consumer’s perspective, it is simpler if the seller has an IOSS number, in which case you pay the VAT to the seller for further remittance already at the point when you order the goods from the online store.

An IOSS purchase cannot exceed 150 euros in value, which means that you are not required to pay customs duty for them. This also means that the collection fee of 25% of the customs duty imposed on the goods, which Customs may otherwise retain, is not remitted to Finland. The customs reform currently being prepared can change this too.

“It would of course be a good thing from the Finnish viewpoint if we could receive at least a share of the collection fee in the future, since the goods are cleared in Finland,” says Tom Ferm, Director of the Foreign Trade and Taxation Department.

In May last year, the Commission published proposals for an EU Customs Reform aiming at faster and more efficient customs administrations in the member states.

The first stage of the reform would be the introduction of a simplified tariff treatment for the distance sales of goods in 2028. Instead of the consumers being the importers, the digital e-commerce platforms would be the so-called ‘deemed importers’ who must be registered for IOSS. They would also be responsible for ensuring the compliance of the goods with the regulations and for all the customs formalities and charges. The platforms would also collect, in addition to VAT, all the customs duties due for the goods at the point of sale.

The proposal for the customs reform involves removing the special customs duty relief for goods worth up to 150 euros and introducing a new simplified method for calculating the import duties to be imposed on goods. Five goods categories or ‘buckets’ would be introduced, each with a different fixed duty rate.

“The proposal under the customs reform is to remove the customs duty relief for goods worth up to 150 euros and to enable a simpler way of applying the customs tariff on goods imported within the IOSS procedure. To ensure equal competitive conditions, the e-commerce platforms would also be responsible for the regulatory compliance of the goods, which would mean that they would face the same requirements as the Finnish retailers also in this respect,” says Ferm.

Read more about the EU Customs Reform: https://tulli.fi/en/customs-reform