EU VAT Proposal: a game changer for e-commerce  


Today, the European Commission published a legislative proposal to modernize VAT rules for cross-border e-commerce. The VAT proposal aims to deliver most of what Ecommerce Europe has always advocated for: the extension of the current Mini One Stop Shop (MOSS) to cross-border supplies of tangible goods and services, the removal of the exemption for the importation of small shipments, the application of home country rules, and the introduction of a VAT exemption threshold, as well as other simplifications for start-ups. Ecommerce Europe is convinced that this proposal has the potential to minimize the burdens when selling cross-border that arise from different VAT regimes across the European Union.

 “According to our Cross-border E-commerce Barometer 2016, VAT still represents one of the top-3 barriers when selling cross-border in the EU. Dealing with 28 different VAT rules and tax administrations is complicated and burdensome for online merchants, especially for the smaller ones. Therefore, Ecommerce Europe welcomes the Commission’s plans to make VAT rules fit for the future”, declared Marlene ten Ham, Secretary General of Ecommerce Europe. “We will continue to work with European policy makers and national governments to ensure that the new legislation will achieve its aims and be properly implemented”

– Marlene ten Ham, Secretary General of Ecommerce Europe

Extension of the MOSS: “a game changer for e-commerce”

In the past few months, Ecommerce Europe has conducted several interviews with online merchants all over Europe. Mr. Paul Edwick (Chief Executive of Lucy Locket, an SME selling toys online cross-border and a member of Ecommerce Europe) declared: “The principles of VAT are the same across the EU, but the practicalities are very different country by country. Tax authorities’ websites are complex and I often have to use Google Translate to find my way around. With accountants in two countries, I got first year bills of 9,000€ and 7,000€. We now need registrations in 7 countries, so this is highly costly. Extending the MOSS to the sales of goods and services would be a major game changer for all e-merchants selling cross border, especially the smaller ones. With this simplification, I could access all countries across EU at an affordable and efficient compliance cost.”

Ecommerce Europe has always supported the extension of the MOSS. However, even with an extended One Stop Shop, online merchants will still have to deal with different VAT rates when selling abroad. The European Union currently has more than 75 different VAT rates and this creates a disturbance of the level playing field needed to foster cross-border trade and to complete the internal market. Therefore, Ecommerce Europe is advocating for further simplification in the field of the VAT rate system.

Other beneficial measures for e-merchants included in the proposal

Ecommerce Europe is pleased to see that the proposal also presents solutions to the issue related to a lack of threshold for intra-EU B2C supplies of electronic services. The lack of a threshold has caused, , several problems, specifically for SMEs, since 2015. Ecommerce Europe is also pleased to see that, with the proposed new rules, a business which has intra-EU B2C supplies of electronic services of a value of less than a certain amount will be able to identify the place where the customer is located based on only one piece of evidence rather than two, thus simplifying the procedure for web shops with less resources.

In addition, Ecommerce Europe is pleased to see that proposal will remove the current VAT exemption on importation of goods up to 22 EUR. With this exemption, VAT is not payable when goods below this threshold are bought from outside the EU. This exception has created market distortions, to the disadvantage of EU businesses, and thus Ecommerce Europe supports the Commission’s initiative to abolish it. Ecommerce Europe also suggests that EU policy makers work together with the industry and its representatives to find workable solutions to inform businesses about the new rules, in an easy way and in a timely manner. The creation of a single web portal containing all relevant information concerning VAT in all Member States, in all the EU languages, would be a possible solution.