Simpler VAT rules to boost European e-commerce
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(BRUSSELS) - New rules covering the VAT environment for e-commerce businesses in the EU, unveiled Thursday by the European Commission, aim to help businesses buy and sell goods and services more easily online.
VAT compliance can place heavy burdens on small companies operating online. The new measures aim to support the digital economy and accelerate growth for online businesses, in particular startups and SMEs.
The proposals include allowing companies that sell goods online to take care of all their VAT obligations in the EU through a digital online portal ('One Stop Shop'). This would be hosted by their own tax administration and would be in their own language. These rules already exist for online sellers of electronic services ('e-services').
An annual VAT threshold of EUR 10,000 would be introduced, under which cross-border sales for online companies are treated as domestic sales, with VAT paid to their own tax administration. This would help support startups and micro-businesses.
Removal of the current exemption from VAT for imports of small consignments from outside the EU, seen as leading to unfair competition and distortion for EU companies.
A change to existing VAT rules would enable EU Member States to apply the same VAT rate to e-publications like e-books and online newspapers as they apply to their printed equivalents.
These new rules, says the Commission, would have a major effect for companies selling goods and services online enabling them to benefit from fairer rules, lower compliance costs and reduced administrative burdens.
A major reason for the rules is also allowing Member States to recoup a current estimated EUR 5 billion of lost VAT on online sales every year. Estimated lost revenues are estimated to reach EUR 7 billion by 2020.