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EC proposes new tax rules to support e-commerce in EU

05 Dec '16
2 min read

The European Commission (EC) has unveiled a series of measures to improve the Value Added Tax (VAT) environment for e-commerce businesses in the EU. The proposals are aimed at allowing consumers and companies, in particular start-ups and SMEs, to buy and sell goods and services more easily online. VAT will be paid in the member state of the final consumer.
 
The new rules propose introduction of the 'One Stop Shop', an EU wide portal for online VAT payments. This will significantly reduce VAT compliance expenses, saving businesses across the EU €2.3 billion a year. 
 
The new rules will also ensure that VAT is paid in the Member State of the final consumer, leading to a fairer distribution of tax revenues amongst EU countries. The new proposals would help member states to recoup the current estimated €5 billion of lost VAT on online sales every year. Estimated lost revenues are likely to reach €7 billion by 2020, if the new rules do not come into force.
 
The latest proposals embrace a new approach to VAT for e-commerce and follow up on the commitments made by the European Commission in the Digital Single Market (DSM) strategy for Europe and the Action Plan towards a single EU VAT area.
 
In addition to enable companies to deal with all their EU VAT obligations in one place, the EC has proposed simpler VAT rules for startups and micro-businesses selling online, and VAT on cross-border sales under €10,000 will be handled domestically. SMEs will benefit from simpler procedures for cross-border sales of up to €100,000.
 
“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 €100 million a week to spend on services for their citizens,” said Pierre Moscovici, commissioner for economic affairs, taxation and the customs union, EU.
 
The new legislative proposals will now be submitted to the European Parliament for consultation and to the Council for adoption. (RKS)

Fibre2Fashion News Desk – India

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