EU Finance Ministers reach agreement on a series of e-Commerce VAT reforms

At yesterday’s meeting of EU Finance Ministers (ECOFIN) they reached agreement on a series of e-Commerce VAT reforms. These proposals are aimed at simplifying the collection of VAT when consumers buy goods or services online. Additionally, they will help combat a projected €5 billion in ‘distance selling’ VAT fraud.

These improvements contain:

2019

• Simplifications for sales of digital services to consumers between EU Member States.
• VAT on cross-border sales under €10,000.00 per annum, will be controlled according to the guidelines of the home country of the smallest businesses, giving a helping hand to 430,000 businesses across the European Union.
• SMEs will benefit from simpler procedures for cross-border sales of up to €100,000.00 per annum.

The above actions will enter into force before 1st January, 2019.

2021

• The Mini One-Stop-Shop (MOSS) will be extended, this will cover B2C electronic services – to take account of B2C goods e-Commerce under the current rules. Which will mean traders will not have to VAT register in every single country where they are selling to consumers.
• Large online marketplaces will be liable for unpaid VAT by non-EU retailers on their platforms.
• They will remove the €22 small value consignment VAT exemption on goods being imported into the EU. This will level the playing field for EU-based retailers who have to account for VAT on all goods. This should raise an additional €1billion in revenues for EU Member States.

EU Member States will have until 31st December 2018 and also 31st December 2020 to transfer the equivalent provisions of the directive into national laws and regulations.

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