EU ministers agree VAT e-commerce reforms

Tue 5th Dec 2017

At today’s meeting of EU Finance Ministers (ECOFIN) agreement was reached on a serious of e-commerce VAT reforms.  The proposals are aimed at facilitating the collection of VAT when consumers buy goods and services online. In addition, they will help combat an estimated €5billion in distance selling VAT fraud.

The reforms include:

  • 2019 – simplifications for sales of digital services to consumers between member states. VAT on cross-border e-services sales under €10,000 a year will be handled according to the rules of the home country of the smallest businesses, giving a boost to 430 000 businesses across the EU. SMEs will benefit from simpler procedures for cross-border sales of up to €100,000 annually. This means businesses with a foreign digital services turnover above €100,000 per annum will have to follow the current, standard compliance obligations. These measures will enter into force by 1 January 2019.
  • 2021 – the extension of the Mini One-Stop-Shop – which covers B2C electronic services – to include B2C goods e-commerce under the existing distance selling rules. This will mean merchants will not have to VAT register in every single country where they are selling to consumers. Merchants holding stocks in the country of their customer will not benefit from this simplification, and will still have to locally VAT register to report the movement of goods and domestic supply (sale). The reforms will generate an overall saving of €2.3bn for businesses, the Commission estimates, and a €7bn increase in VAT revenues for member states.
  • Removal of the €22 small value consignment VAT exemption on goods being imported into the EU. This will level the playing field for EU-based retailers who have to account for VAT on all goods.  This should raise a further €1billion in revenues for member states.
  • Making large online marketplaces liable for unpaid VAT by non-EU merchants on their platforms.

The member states will have until 31 December 2018 and 31 December 2020 to transpose the corresponding provisions of the directive into national laws and regulations.



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