The European Commission has announced a number of measures that should significantly improve the VAT climate for e-commerce within the European Union.
Simplification of VAT regulations and a central point for declarations will provide e-retailers with substantial savings in both time and money.
In the new proposal, the VAT levy is transferred to the buyer’s country. Thus, the EC wants to provide a fairer distribution of VAT revenues between its Member States. Shops that do business internationally then only need to arrange the VAT return once each quarter via a central declaration point, in the same manner that it is arranged in their home country.
Start-ups and small businesses selling up to ten thousand euros in international goods and services should keep following the VAT legislation in their homeland. The European Commission wants the threshold for international trading in this way to be removed.
The VAT exemption for packages up to a value of 22 euro from non-EU web shops importing into the EU expires. This puts an end to large-scale fraud in this area and the unfair position of European online retailers over their intercontinental competitors.
With the new VAT rules for web shops the European Commission hopes to make international single market significantly more accessible and attractive. The simple rules and tools should result in tax reductions of 2.3 billion, representing an average of eight thousand per year per international online retailer.
In practical terms, The EU wants to expand the VAT one-stop shop for e-services with e-goods. The Commission’s proposal goes to the European Parliament for approval and then to the EU Member States for translation into local legislation. That process may take two years.
Are you an international online retailer? Then it is good to be prepared for the changes relating to the new VAT rules. We can guide you through these adjustments.