E-Commerce : for a modernization of VAT rules

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E-Commerce : for a modernization of VAT rules

For a simplification of the VAT rules that concern online sales companies in B to C, the Economic and Financial Affairs Council (ECOFIN) adopted a set of rules on 5 December 2017 to support the digital economy.

These new rules should allow e-commerce companies, especially start-ups and SMEs to grow faster.

FROM 2019 : A SIMPLIFICATION OF VAT RULES FOR MICRO-ENTERPRISES AND SMES IN E-COMMERCE

The companies that sell goods online are currently subjected to the distance selling regime, which requires them to identify with VAT in each Member State where they make their sales, and this also if they exceed the sales threshold set by the Member State of destination.

As of 2019, micro-enterprises and SMEs that carry out cross-border online goods and services sales, that do not exceed € 10,000, will be subject to the rules concerning small businesses in their home country.

FROM 2021: THE CREATION OF A ONE-STOP SHOP

The mini One-Stop shop (MOSS) which concerns currently only electronic services, telecommunication, broadcasting and TV, will be extended to goods and services out cross-border given to European consumers. Companies realizing those provisions should use this one-stop shop for VAT registration of distance sales, that is easy to use and in their own language.

The new One-stop shop (OSS) could be extended to goods imported by non-EU sellers, delivered to European consumers. This non-EU sellers should designated a tax representative in EU to accomplish their VAT registration.

Moreover, in order to combat the fraud that has generated a revenue deficit of € 1 billion in the European Union, the VAT exemption for goods imported from non-EU countries, with a lower value at 22 euros, will be deleted.

This modification of VAT rules for e-commerce will warranty the VAT payment in the final consumer’s State Member, which will make a more equitable distribution of tax revenues among the EU Member States.

To find out more about your VAT obligations, you can contact our experts.

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