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EU Launches Debate On Digital VAT Reform

by Ulrika Lomas, Tax-News.com, Brussels

28 September 2015


The European Commission has launched a public consultation to identify ways to simplify VAT payments on cross-border e-commerce transactions in the EU.

The Commission is seeking to receive a wide range of views from business owners and other interested parties before it drafts its legislative proposals on the topic in 2016, as part of the Digital Single Market strategy.

Andrus Ansip, European Commission Vice-President for the Digital Single Market, said: "We promised to support companies, and especially smaller ones, to reduce burdens arising from different VAT regimes. Today we ask businesses and other stakeholders to help find the most effective and meaningful ways of delivering on this promise. In the Digital Single Market Strategy we have already put forward some measures we would like to take, such as a VAT threshold for startups."

The consultation will also invite feedback on new rules for VAT payments on cross-border telecommunications, broadcasting, and electronic services that came into force last January. As mentioned by Ansip, this includes a proposal for a de minimis threshold, which would exempt small firms from the new VAT payment and transaction reporting regime, although member states have previously rejected the idea.

The Commission is also keen to garner feedback on the associated Mini-One Stop Shop (MOSS), the tool that allows businesses that sell digital services to customers in more than one EU country to declare and pay all their VAT in their own member state.

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: "This consultation presents a real opportunity to ensure that future VAT revenues from the digital economy are distributed fairly and effectively. At the same time, we want to make it as easy as possible to comply with the rules. We also have an interest in ensuring that future legislation reflects the reality for businesses across the EU."

In particular, as part of its Digital Single Market strategy, the Commission is to propose measures to reduce the administrative burden on businesses arising from different VAT regimes including by:

  • Extending the current single electronic registration and payment mechanism to cover the sale of tangible goods;
  • Introducing a VAT threshold to help online start-ups and small businesses;
  • Allowing cross-border businesses to be audited only by their home country for VAT purposes; and
  • Removing the VAT exemption for the import of small consignments from suppliers in third countries.

The consultation will run for 12 weeks and end on December 18, 2015.

TAGS: tax | small business | business | European Commission | value added tax (VAT) | commerce | e-commerce | legislation | services | Europe

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