New rules on VAT in e-commerce, which will be introduced across the EU in July this year, should save EU companies up to EUR 2.3 billion annually in compliance costs, in addition, these rules will also help reduce the VAT gap, the European Commission’s Directorate-General for Taxation and Customs Union (DG TAXUD) said.
The new VAT rules will enter into force on 1 July 2021 to ensure that businesses across the EU benefit from a simple and uniform system. These rules simplify existing VAT obligations and reduce administrative burdens for businesses selling cross-border over the internet, it was recalled.
The EU has developed new online tools with which businesses can register and fulfill their VAT obligations for all sales in the EU. This replaces the previous system where online businesses were required to register for VAT at all times. EU country before they can sell there. The new system should save EU companies up to € 2.3 billion a year in compliance costs.
The new rules will also help close the VAT gap.
While the overall EU VAT Gap has slightly decreased by almost EUR 1 billion to EUR 140.04 billion in 2018, the new VAT e-commerce rules will support efforts to further reduce this number and make it that global digital transformation will benefit both people and businesses.
The goals of the new rules are:
– ensure that VAT is payable where there is consumption of goods or provision of services for which it has been paid;
– create a single VAT system for cross-border supplies of goods and services;
– offer businesses a simple system for filing returns and paying VAT in the EU through a one-stop shop (import);
– introduce a level playing field for EU companies and non-EU sellers, listed in the material.
“From 1 July, businesses will be able to electronically declare and pay VAT on all intra-EU sales in a single quarterly return – all in cooperation with their Member State’s tax administration and in their language, even if the sales are cross-border. New platform for businesses and taxpayers, the VAT One Stop Shop (OSS) can account for output VAT on goods and services sold online across the EU, reducing compliance costs by up to 95%, “the release continues.
The One Stop Shop for Import (IOSS) makes it easy to collect, declare and pay VAT for sellers who deliver goods to non-EU customers in the EU. In practice, this means that these suppliers and electronic interfaces can collect, declare and pay VAT directly to the tax authorities of their choice, rather than having the customer pay import VAT upon delivery of the goods. This makes life easier for businesses, but also protects online buyers from hidden costs.
Finally, the current VAT exemption for shipments imported into the EU with a value not exceeding € 22 will be abolished. While most non-EU companies are fair, this exemption meant that some sellers could unfairly declare a lower price for expensive goods, such as smartphones, just to do so. to take advantage of this exemption, thereby harming EU companies, which had no choice but to charge their EU customers the full VAT rate for the same products. By eliminating this exemption, European companies will be able to compete on more equal terms.
