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EU VAT changes for digital single market

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The European Commission has followed up its VAT action plan published in April with a final package of changes to improve e-commerce for traders in the EU. These include:

·         extending the VAT one-stop-shop to online sales of all goods and services: companies selling telecommunications, broadcasting or electronically supplied services to consumers in the EU can already use the one-stop shop to account for VAT in a single return. The Commission is now proposing that this simplification be made available to online sellers of goods as well;

·         allowing application of domestic rules to annual sales under €10,000: which the Commission says will make complying with VAT rules easier for 430,000 companies across the EU, representing 97% of all micro-business trading cross-border;

·         simpler rules for cross-border sales of services up to €100,000 annually: this yearly threshold will provide SMEs with simplified rules for identifying where their customers are based for VAT purposes;

·         removal of small consignments relief: which currently exempts from VAT Small consignments imported into the EU that are worth less than €22. With around 150 million parcels imported free of VAT into the EU each year, the Commission says this system is open to massive fraud and abuse, creating major distortions against EU business; and

·         alignment of VAT rates on e-publications with their print equivalents: current rules allow member states to tax printed publications such as books and newspapers at reduced or zero rates, while the same rules exclude e-publications, meaning that these products must be taxed at the standard rate.

Announcing the proposals, Pierre Moscovici, commissioner for economic affairs, taxation and the customs union, said: ‘Online businesses operating in the EU have been asking us to make their lives simpler. Today we’re doing that. Companies big and small that sell abroad online will now deal with VAT in the same way as they would for sales in their own countries. That means less time wasted, less red tape and fewer costs. We’re also simplifying rules for micro-businesses and startups, allowing them to tap new markets more easily. Our proposals mean that European governments stand to gain an additional €100m a week to spend on services for their citizens’.

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

Issue: 1335
Categories: News