ECOFIN calls for next steps for e-commerce VAT system
The Council welcomes the VAT Action Plan of the European Commission and agrees that the EU VAT system needs to be modernized and improved while stressing the importance of keeping the EU's business environment competitive.
The council also adopts the following conclusions on a new VAT system for e-commerce businesses:
- The council welcomes the call to reduce VAT compliance burdens for business, particularly for SMEs, both within Member States and across borders;
- The council highlights the importance of reflecting upon the position of micro-SMEs in the VAT system, in order to promote growth, jobs and real economy in the EU, without causing distortions of competition;
- In the context of the Digital Single Market Strategy, the council stresses the importance of finding an EU-level solution rapidly to eliminate the competitive disadvantage for EU suppliers and undertakes to review the scope and discuss the possibility of repealing the VAT exemption for final importation of small consignments of goods into the EU by non-EU suppliers, considering also the impact of possible changes on the customs administration;
- The council recognises the need to simplify cross-border e-commerce, and the opportunity to extend the "One Stop Shop" for online sales of tangible goods to final consumers and calls for further analysis and technical work to be undertaken on a common EU-wide simplification measure, including a threshold;
- The council notes that the debate will continue concerning a possible introduction of legal means allowing for home country checks, including a single audit of cross-border businesses;
- The council looks forward to receiving the results of the ongoing Commission' study on VAT obstacles to cross-border e-commerce and the legislative proposals by the Commission.
In our view the council concluded on two major issues for the e-commerce business. The search for an EU-level solution to eliminate the competitive disadvantage for small consignments and the call for further analysis and technical work on a common EU-wide simplification measure of the EU VAT-system for the e-commerce business. This conclusion should be seen as even more support for the cross border e-commerce business and increases the chances on an EU wide implementation.
If you have any questions regarding this topic, please contact one of our VAT Compliance advisors.