VAT Action Plan: “Time to decide!”

On April 7, 2016, the European Commission has presented a new action plan to modernize the European Union's VAT system. The new VAT system should be more fraud-proof and business-friendly.

Part of this action plan concerns the business of cross-border e-commerce. The European Commission wants to implement a simplified and modernized package for cross-border e-commerce trading companies. The current VAT system is complex and costly for Member States and business alike. The average annual costs of supplying goods to another EU country are estimated at € 8.000. Moreover, EU businesses are at a competitive disadvantage, as non-EU suppliers can supply VAT-free goods to consumers in the EU under the exemption for imports of small consignments. Also the complexity of the system makes it difficult for Member States to ensure compliance, with losses estimated at around € 3 billion annually.

The proposed new e-commerce package will include the following aspects:

  • Extending the current One Stop Shop concept to all cross-border e-commerce, including distance sales;
  • Introducing common EU-wide simplification measure (VAT threshold) to help small start-up e-commerce businesses;
  • Allowing for home country checks, including a single audit of cross-border businesses;
  • Removing the VAT exemption for the importation of small consignments from suppliers in third countries.

The European Commission will present a legislative proposal by the end of 2016 to modernize and simplify VAT for cross-border e-commerce.

In order to ensure a continued steering of the overhaul of the EU VAT system, the European Commission will continue reporting regularly on the state of play of this Action Plan and set out new actions. Of course, we will inform you as soon as possible and will guide you through this process.


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