EU Commission proposes new VAT rules

7th December 2016

A number of measures have been proposed by the European Commission (EC) to improve VAT for e-commerce businesses in the EU.

The consultation proposes that VAT transactions are completed in the member state of the final consumer, resulting in fairer tax distribution among EU countries.

The ‘One Stop Shop’ portal for online payments will also reduce VAT compliance expenses, potentially saving businesses across the EU €2.3 billion a year.

It is estimated that, if no action is taken, lost VAT revenue could reach €7 billion by 2020.

The measures being introduced include:

  • allowing companies to deal all their EU VAT obligations when selling goods online in 1 place
  • simplifying VAT rules for start-ups and micro businesses
  • handling VAT on cross-border sales under €10,000 domestically
  • action against VAT fraud outside the EU
  • reducing VAT rates for e-publications such as e-books and online newspapers.

Pierre Moscovici, commissioner for economic affairs, taxation and the customs union, said:

“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.”

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