Ecommerce Europe, the European e-commerce association, launched on 1 March its new Working Group on Taxation and VAT, in order to better answer to the demands of online merchants and to the need for expertise and coordination in preparation for new legislation on the taxation of the digital economy and the ongoing work related to the European Commission’s Action Plan on VAT.
During the first meeting of the Working Group, Ecommerce Europe had the opportunity to discuss the upcoming Commission’s initiative in the field of taxation of digital activities, as well as the new proposals in the field of VAT and the implementation of the recently adopted EU VAT Digital Single Market Package.
Upcoming legislation on the fair taxation of the digital economy
The European Commission is expected to publish a Proposal addressing the digital taxation of companies on 21 March, which includes “taxing for the short term some parts of digital activities with a modest rate and a very precise basis”, according to a recent article published by Politico on this topic. The Taxation and VAT Working Group analyzed and discussed the partial draft proposal obtained by Politico dated 26 February, and identified potential issues for EU merchants. Thus, Ecommerce Europe and its members informed the EU and national policymakers accordingly.
Progress on the VAT Action Plan
As part of its Action Plan on VAT, adopted on 7 April 2016, the European Commission published a series of proposals and fundamental principles to achieve a single EU VAT area. A first step was achieved with the adoption the VAT Digital Single Market Package by the Council on 5 December, which was welcomed by Ecommerce Europe, as it is supposed to facilitate VAT compliance and reduce costs when online merchants will sell cross-border in the European Union. Some of the new VAT rules will be applicable in 2019 and some others in 2021. In this very important phase of implementation, Ecommerce Europe stays closely in contact with the European Commission as a member of the VAT Expert Group of DG TAXUD.
Always in the framework of the VAT Action Plan, the European Commission published two new proposals on VAT rates and VAT schemes for small businesses on 18 January. During the Working Group meeting on 1 March, Ecommerce Europe presented and discussed the new proposals with its members. The first proposal aims at introducing more flexibility for Member States to change the VAT rates they apply to different products. The second one aims at simplifying rules to reduce the cost of VAT compliance for small businesses. It proposes to extend VAT exemption to cover small businesses established in another Member State – which will benefit from VAT exemptions where they do businesses – and it simplifies VAT obligations both for exempt and non-exempt small businesses.
Ecommerce Europe and its new Working Group, will continue to engage with EU and national policymakers to ensure that the voice of online merchants will be taken into account during the ongoing discussions on VAT and taxation of the digital economy.
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