#DigitalSingleMarket: Commission’s #eVAT rules are ‘game changer’ for #ecommerce in EU

| December 1, 2016 | 0 Comments

161201ecommercevat2The European Commission unveiled a series of measures to improve the Value Added Tax (VAT) environment for e-commerce businesses in the EU that could save businesses in the EU as much as € 2.3 billion a year alone on compliance costs.

Unlocking the EU’s e-commerce

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.

“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.”

A cross-border e-commerce survey carried out by Ecommerce Europe this year found that VAT  represents one of the top-3 barriers when selling cross-border in the EU.

“Dealing with 28 different VAT rules and tax administrations is complicated and burdensome for online merchants, especially for the smaller ones. Therefore, Ecommerce Europe welcomes the Commission’s plans to make VAT rules fit for the future,” said Marlene ten Ham, Secretary General of Ecommerce Europe.

By introducing an EU wide portal for online VAT payments (the ‘One Stop Shop’) will make a big difference to online sellers. Paul Edwick, Chief Executive of Lucy Locket, an SME selling toys online cross-border said: “The principles of VAT are the same across the EU, but the practicalities are very different country by country. With accountants in two countries, I got first year bills of 9,000€ and 7,000€. We now need registrations in seven countries, so this is highly costly. Extending the MOSS to the sales of goods and services would be a major game changer for all e-merchants selling cross border, especially the smaller ones. With this simplification, I could access all countries across EU at an affordable and efficient compliance cost.”

The Commission’s proposal makes a big difference but Ecommerce Europe points out that while this is welcome sellers still have to deal with the EU’s 75 different VAT rates.

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. A more transparent system could also help EU countries recoup an estimated €5 billion of lost VAT on online sales every year.

eBooks versus printed publications

The Commission is delivering on its pledge to enable EU countries to apply the same VAT rate to e-publications such as e-books and online newspapers as for their printed equivalents, removing provisions that excluded e-publications from the favourable tax treatment allowed for traditional printed publications.

The Federation of European Publishers and the European and International Booksellers Federation warmly welcome the proposal by the European Commission to allow the application of reduced rates of VAT to electronic publications, and in particular e-books.

President of the Federation of European Publishers, Henrique Mota, said: “This is a great day for our organisations: the Commission’s proposal rewards our years of advocacy for the recognition that all books deserve the possibility to be applied reduced rates of VAT, independently from their format. We are grateful to the Commission for this fundamental step forward, and also to the European Parliament for its constant support, as well as to all the other associations that contributed to this result.”

Action against VAT fraud from outside the EU

The EU proposes removing of the current exemption from VAT for imports of small consignments from outside the EU. Under current rules, imported goods bought online from non-EU countries are exempt from VAT, if they cost below €22. Companies based outside the EU have fraudulently marked expensive goods such as mobile phones and tablets as costing less than €22, meaning that no VAT is paid. This puts EU businesses at a clear disadvantage to non-EU businesses.

 

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Category: A Frontpage, Digital economy, Digital Single Market, Digital Society, Economy, Enterprise, EU, European Commission, Politics, Single Market, VAT

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