Ecommerce Europe Webinar on the Implementation of the VAT E-commerce Package: Need for an EU harmonized approach

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On 11 June, Ecommerce Europe hosted a webinar on the VAT E-commerce Package and the road to its implementation, which was moderated by Mr. Luca Cassetti, Ecommerce Europe’s Director of EU Public Affairs. The webinar gathered the European Commission and representatives of e-commerce companies and suppliers.

Ecommerce Europe invited Mr. Alan Rhode to provide an overview of the key elements of the VAT E-commerce Package. As Co-founder of Taxmen, a company specialising in tax and legal services for the e-commerce sector, Alan Rhode focused on the three main pillars of the VAT Reform adopted in December 2017:

    1. The removal of distance selling thresholds and the extended One-Stop-Shop (OSS);
    2. The repeal of the VAT small consignment exemption on imports;
    3. The marketplace VAT liability on imports and intra-EU sales by non-EU merchants.

More details on the new rules included in the VAT E-commerce Package are available at this website.

The European Commission’s DG TAXUD also joined the discussion to elaborate on the latest developments on the VAT E-commerce Package, in particular the proposed deferral of its application to 1 July 2021. In fact, due to the COVID-19 crisis, some Member States and key business operators could not allocate the necessary resources to properly prepare for the new rules by the end of 2020, original deadline for the application of the new VAT rules. Therefore, the Commission presented on 8 May its Proposal for a deferral of the VAT Package. The proposal now needs to be officially approved by the Council at unanimity, after having consulted the European Parliament for a (non-binding) opinion. The deferral is expected to be adopted quite swiftly.

Mr. Walter Trezek, Co-Chair of the e-Logistics Working Group of Ecommerce Europe, pointed to the fact that European e-commerce merchants are currently facing a large amount of low-value consignments from outside the EU, placing them on an unlevel playing field. He also referred to the work of the Universal Postal Union (UPU) over the past decade and their decision to apply Electronic Advance Data from January 2021, which would prepare Member States customs for the implementation of the VAT E-commerce Package six months later. Finally, Ms. Sophie Claessens from Amazon identified and elaborated on three impact points for B2C e-commerce marketplaces: the mandatory collection and remittance of VAT by non-EU sellers where goods are already stored in EU warehouses (Union One-Stop-Shop), the mandatory removal of VAT exemption under €22, and the option for marketplaces to collect and remit VAT on sales imported from outside the EU and sent directly to consumer on goods under €150 (Import One Stop Shop – IOSS). During the Q&A session, the speakers also discussed how to incentivize the use of the optional IOSS scheme, which – according to the Commission – should be already attractive enough for businesses to use without any extra incentives.

The main takeaways from the webinar were that the EU needs a swift and harmonized approach on the VAT deferral, in order to give e-commerce businesses the legal certainty needed to prepare properly for these important new VAT rules. Furthermore, education of businesses, especially SMEs, remains a crucial element, since they need to familiarize with the new measures. Ecommerce Europe expressed its support to the European Commission in this process.

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