The EU’s Economic and Financial Affairs Council (ECOFIN) has reached agreement on a new directive and regulation forming the second part of the Commission’s VAT e-commerce package, which will come into force in January 2021.
The new rules will extend the existing VAT mini one-stop-shop (VAT MOSS) into a one-stop-shop (OSS) covering all types of services, as well as intra-community distance sales of goods and distance sales of goods imported from non-EU countries by January 2021.
The rules introduce special provisions for online marketplaces, who will be treated as the seller when they facilitate sales of goods with a value up to €150 to customers in the EU by non-EU businesses using their platform. The same rules will apply when non-EU businesses use online platforms to sell goods from ‘fulfilment centres’ in the EU, irrespective of their value, allowing tax authorities to claim the VAT due on those sales. Online platforms will also be expected to keep records of sales of goods or services made by businesses using the platform.
The regulation specifies when online marketplaces are considered to facilitate such supplies, based on whether or not they are setting the terms and conditions of the supply as well as their involvement in the payment or ordering and delivery of the goods. It also specifies what kind of records are to be kept by platforms facilitating supplies of goods or services to customers in the EU.
Final adoption of the new rules must wait for the EU Parliament to give its consultative opinion, although the Commission says that member states can rely on the rules as adopted by the Council to start preparing their IT systems for the OSS.
Member states will have until the end of 2020 to transpose the new rules of the VAT directive into their national legislation. Businesses wishing to make use of the OSS can start registering in member states from 1 October 2020.
The texts of the directive, relating to ‘distance sales of goods and certain domestic supplies of goods’, and the regulation relating to ‘supplies of goods or services facilitated by electronic interfaces and the special schemes for taxable persons supplying services to non-taxable persons, making distance sales of goods and certain domestic supplies of goods’, are available at bit.ly/2ChHa18.
The first part of the package agreed in December 2017 involved two changes to the operation of the VAT MOSS for supplies of digital services with effect from 1 January 2019. Businesses whose total supplies of digital services across the EU fall below a €10,000 threshold may apply the VAT rules of their home country, rather than those of the country where their customers are located. Non-EU businesses already registered for VAT are now allowed to use the ‘non-union’ VAT MOSS scheme to account for VAT on sales of digital services to EU member states.
Speaking after the ECOFIN meeting, Commission vice-president Valdis Dombrovskis welcomed the agreement, which he said: ‘should help member states to recover some €5bn in lost tax revenues in this sector each year. This figure is increasing and is expected to rise to €7bn by 2020’.
The EU’s Economic and Financial Affairs Council (ECOFIN) has reached agreement on a new directive and regulation forming the second part of the Commission’s VAT e-commerce package, which will come into force in January 2021.
The new rules will extend the existing VAT mini one-stop-shop (VAT MOSS) into a one-stop-shop (OSS) covering all types of services, as well as intra-community distance sales of goods and distance sales of goods imported from non-EU countries by January 2021.
The rules introduce special provisions for online marketplaces, who will be treated as the seller when they facilitate sales of goods with a value up to €150 to customers in the EU by non-EU businesses using their platform. The same rules will apply when non-EU businesses use online platforms to sell goods from ‘fulfilment centres’ in the EU, irrespective of their value, allowing tax authorities to claim the VAT due on those sales. Online platforms will also be expected to keep records of sales of goods or services made by businesses using the platform.
The regulation specifies when online marketplaces are considered to facilitate such supplies, based on whether or not they are setting the terms and conditions of the supply as well as their involvement in the payment or ordering and delivery of the goods. It also specifies what kind of records are to be kept by platforms facilitating supplies of goods or services to customers in the EU.
Final adoption of the new rules must wait for the EU Parliament to give its consultative opinion, although the Commission says that member states can rely on the rules as adopted by the Council to start preparing their IT systems for the OSS.
Member states will have until the end of 2020 to transpose the new rules of the VAT directive into their national legislation. Businesses wishing to make use of the OSS can start registering in member states from 1 October 2020.
The texts of the directive, relating to ‘distance sales of goods and certain domestic supplies of goods’, and the regulation relating to ‘supplies of goods or services facilitated by electronic interfaces and the special schemes for taxable persons supplying services to non-taxable persons, making distance sales of goods and certain domestic supplies of goods’, are available at bit.ly/2ChHa18.
The first part of the package agreed in December 2017 involved two changes to the operation of the VAT MOSS for supplies of digital services with effect from 1 January 2019. Businesses whose total supplies of digital services across the EU fall below a €10,000 threshold may apply the VAT rules of their home country, rather than those of the country where their customers are located. Non-EU businesses already registered for VAT are now allowed to use the ‘non-union’ VAT MOSS scheme to account for VAT on sales of digital services to EU member states.
Speaking after the ECOFIN meeting, Commission vice-president Valdis Dombrovskis welcomed the agreement, which he said: ‘should help member states to recover some €5bn in lost tax revenues in this sector each year. This figure is increasing and is expected to rise to €7bn by 2020’.
