Ecommerce Europe overall welcomes the agreement reached today in the ECOFIN Council of the European Union on the “VAT Digital Single Market Package”. The VAT Package will make it easier for online merchants to comply with VAT obligations when selling cross-border in the European Union. Nevertheless, Ecommerce Europe regrets the introduction of a marketplace liability regime for VAT on e-commerce imports.
“Ecommerce Europe is confident that in general this reform will modernize VAT rules for cross-border e-commerce. In particular, online merchants will benefit from an extended Mini One Stop Shop (MOSS) also covering the distance sales of goods, something that Ecommerce Europe has been strongly advocating for”, said Margreet Lommerts, Ecommerce Europe’s Secretary General ad interim. “Nevertheless, we regret that the VAT Package adopted today will make marketplaces liable for VAT collection on e-commerce imports, without having requested an impact assessment on forehand”, added Ms. Lommerts.
By extending the MOSS to all B2C intra-EU services and to distance sales of goods between Member States, the Package will foster the growth of cross-border e-commerce, by addressing many the shortages of the current VAT framework. Ecommerce Europe is convinced that the One Stop Shop online portal will simplify VAT obligations for online merchants, by making VAT registration, declaration and payment procedures easier and cheaper.
Furthermore, Ecommerce Europe welcomes the removal of the VAT exemption for the import of small consignments from outside the European Union, as it should curb the trend of VAT evasion and reestablish a level playing field between EU merchants and non-EU merchants. Many non-EU merchants were unduly benefitting from this exemption, which led to market distortion. While supporting the removal of the exemption, Ecommerce Europe recognizes that implementing this part of the reform by 2021 will be challenging, given the need for EU customs authorities and logistic operators to set up the suitable digital and administrative facilities.
Finally, Ecommerce Europe has some concerns regarding the introduction of a marketplace liability regime for VAT on e-commerce imports into the European Union with a value not exceeding 150 €. The proposed solution to consider marketplaces as “taxable persons” for the supply of goods promoted via marketplaces is in stark contrast with the current standard EU VAT rules, whereby the taxable person in a supply of goods is usually the seller (unless the reverse charge scheme applies). Such derogation appears an unjustified, non-proportional deviation from the principles inspiring the VAT framework. As the provision on liability was not inserted in the original Commission proposal, a thorough impact assessment should have been undertaken to better evaluate the effects of such a regime before adopting it.