OUT OF THE BOX

New tax rules to support e-commerce and online businesses

The Commission proposes to improve the Value Added Tax (VAT) environment for e-commerce businesses in the EU. These proposals will allow consumers and companies, in particular start-ups and SMEs, to buy and sell goods and services more easily online.

Unlocking e-commerce in Europe and the creation of a Digital Single Market are among the top priorities of the Juncker-Commission.

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 €2.3 billion 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.

These proposals would help Member States to recoup the current estimated €5 billion of lost VAT on online sales every year. Estimated lost revenues are likely to reach €7 billion by 2020 if no action is taken.

In particular, the Commission proposed:

  • New rules allowing companies that sell goods online to deal easily with all their EU VAT obligations in one place;
  • To simplify VAT rules for startups and micro-businesses selling online, VAT on cross-border sales under €10,000 will be handled domestically. SMEs will benefit from simpler procedures for cross-border sales of up to €100,000 to make life easier;
  • Action against VAT fraud from outside the EU, which can distort the market and create unfair competition;
  • To enable Member States to reduce VAT rates for e-publications such as e-books and online newspapers.

These legislative proposals will now be submitted to the European Parliament for consultation and to the Council for adoption.

Liat

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