EC proposes new tax rules to support e-commerce
The European Commission has today (1 December) unveiled a series of measures which it says will improve the Value Added Tax (VAT) environment for e-commerce businesses in the European Union. In a statement issued on its Europa website, the EC said: “By introducing an EU wide portal for online VAT payments (the ‘One Stop Shop’), VAT compliance expenses will be significantly reduced, saving businesses across the EU €2.3bn a year. The new rules will also ensure that VAT is paid in the Member State of the final consumer, leading to a fairer distribution of tax revenues amongst EU countries. Our proposals would help Member States to recoup the current estimated €5bn of lost VAT on online sales every year. Estimated lost revenues are likely to reach €7bn by 2020 and it is essential that we act now.”
Andrus Ansip, Vice President for the Digital Single Market, said: “We are delivering on our promises to unlock e-commerce in Europe. We have already proposed to make parcel delivery more affordable and efficient, to protect consumers better when they buy online and to tackle unjustified geo-blocking. Now we simplify VAT rules: the last piece in the puzzle. Today’s proposal will not only boost businesses, especially the smallest ones and startups, but also make public services more efficient and increase cooperation across borders.”
Pierre Moscovici, Commissioner for Economic Affairs, Taxation and the Customs Union, added: “Online businesses operating in the EU have been asking us to make their lives simpler. Today we’re doing that. Companies big and small that sell abroad online will now deal with VAT in the same way as they would for sales in their own countries. That means less time wasted, less red tape and fewer costs. We’re also simplifying rules for micro-businesses and startups, allowing them to tap new markets more easily. Our proposals mean that European governments stand to gain an additional €100m a week to spend on services for their citizens.”
The plans published today include proposed new rules allowing companies that sell goods online to deal easily with all their EU VAT obligations in one place. In addition, to simplify VAT rules for startups and micro-businesses selling online, VAT on cross-border sales under €10,000 will be handled domestically.
The EC statement added: “Currently, online traders have to register for VAT in all the Member States to which they sell goods. Often cited as one of the biggest barriers to cross-border e-commerce, these VAT obligations cost businesses around €8,000 for every EU country into which they sell. We are now proposing that businesses make one simple quarterly return for the VAT due across the whole of the EU, using the online VAT One Stop Shop. This system already exists for sales of e‑services such as mobile phone apps, and has been proven successful with more than €3 billion in VAT being collected through the system in 2015. Administrative burdens for companies will be reduced by a staggering 95%, giving an overall saving to EU business of €2.3 billion and increasing VAT revenues for Member States by €7 billion.”
Click here to view the full EC statement.