Europe wants to modernise VAT rules for cross-border e-commerce
Updated: Mar 30
The European Commission has proposed a plan to improve the VAT rules for cross-border ecommerce in Europe. With this proposal it should be easier for consumers and companies to buy and sell goods and services online.
The European Commission wants to introduce a EU-wide portal for online VAT payments, thereby extending the current Mini One Stop Shop (MOSS) to cross-border supplies of goods and services. This could be a real game change for online retailers, especially the smaller ones, who sell to other countries, because they can now access all EU countries at an affordable and efficient compliance cost, as they deal with all their EU VAT obligations in one place. VAT on cross-border sales under 10,000 euros will be handled domestically. One of the new rules will also ensure that VAT is paid in the country where the final consumer is living. This should lead to a fairer distribution of tax revenues amongst EU countries.
VAT still one of top barriers when selling cross-border
The proposals are of course still proposals and will be submitted to the European Parliament for consultation and to the Council for adoption. But European ecommerce associations are happy with the proposed rules. “We are 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”, Ecommerce Europe says, explaining that according to their research, VAT still is one of the top barriers when selling cross-border in Europe.
“But 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”, the organization says.
‘We hope this helps enables SMEs to sell cross-border’
EMOTA also welcomes the new rules. “You can’t expect an efficient and vibrant digital economy to be mirrored by an equally inefficient outdated paper based system. That’s why we welcome the EU Commission’s proposals and hope the Council will back this proposal and help enable SMEs to trade across borders.”