E-commerce: EU presents new VAT regulations for web shops
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.
Central processing via the One Stop Shop
The EU is introducing an EU-wide portal where international entrepreneurs can do their VAT returns online, called the One Stop Shop (extension of the MOSS). International online retailers will then see their administrative obligations reduced by 95%.
Simplification for start-ups and micro-enterprises
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.
Lifting of VAT exemption for non-EU members
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.
Tax cuts Single Market Strategy
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. The Commission’s proposal now goes to the European Parliament for approval and then to the EU Member States for local translation into legislation. That process may take two years.
New VAT rules for your web shop
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. For more information, please contact our VAT specialists.