Taxation of the Digital Economy: The Start

The Global digital transformation holds a huge potential for all entrepreneurs worldwide but also has complex implications for VAT.

Therefore, the European Commission decided that a response from a taxation perspective is required. In 2013 the Expert Group on Taxation of the Digital Economy started with the examination of the best ways to tax the digital economy in the EU. The Expert Group focused on identifying the main problems and presenting several solutions.

By the end of May 2014 the Expert Group presented its findings:

  • the VAT exemption on the importation of small commercial consignments in third countries generates distortions of competition;
  • the obligation to register in every Member State where VAT is due causes an unnecessary burden for companies;
  • the audit of businesses under the current MOSS causes disproportionate administrative burdens;
  • there is a distortionary effect of VAT rates in cross-border B2C service transactions; and
  • the complexity of VAT rates makes it difficult for business to comply.

As of January 1, 2015 the MOSS system was introduced for telecommunications, broadcasting & electronic services, meaning only one VAT registration is necessary for e-commerce companies who provide these services to consumers in several Member States.

Mid 2015 the European Commission communicated that it is working on legislative proposals to reduce the administrative burden on businesses, by extending the MOSS to cross-border online sales of goods and introducing a common EU-wide VAT threshold for start-up ecommerce businesses.

We are looking forward to this proposal as this would be a positive development for companies in the cross-border e-commerce sector.


If you have any questions regarding this topic, please contact one of our VAT Compliance advisors.