The European Commission has recently published its long awaited Action Plan on VAT. With this Action Plan, the Commission sets out immediate and urgent actions to tackle the VAT gap as well as adapt and update the system to the requirements of the digital economy. Ecommerce Europe is convinced that this reform of the European VAT landscape is a first good step towards more simplified and less expensive VAT rules for e-commerce.
Supporting e-commerce through removing VAT obstacles to cross-border trade
Aiming also to foster cross-border e-commerce, the Commission’s Action Plan lays out immediate and urgent key actions to remove, harmonize and simplify VAT-related obstacles to e-commerce, to tackle the VAT gap by improving cooperation between tax administrations and to establish a definitive VAT regime for cross-border trade.
According to the preliminary analysis of the Ecommerce Europe’s Cross-border E-commerce Barometer 2016, different taxation systems, VAT rules/rates and customs still represent a difficult barrier to overcome when going cross-border for 48% of companies selling abroad. Concrete examples of barriers identified by companies that persist are high VAT-related accounting and administrative costs, difficult VAT registration and declaration procedures, legal uncertainty and general unawareness of VAT rules, lack of information on VAT rules, difficulties in dealing with foreign taxation authorities (i.e. language), practical problems in displaying the correct final price including the correct VAT rate.
Therefore, Ecommerce Europe welcomes the European Commission’s plan to present a legislative proposal by the end of 2016 to modernize and simplify VAT rules for cross-border e-commerce. In particular, Ecommerce Europe welcomes the Commission’s proposals for the extension of the current Mini One Stop Shop to all cross-border e-commerce (including distance sales), the introduction of common EU-wide simplification measures to help small start-up e-commerce businesses, the streamlining of audits and the removal of anti-competitive VAT-related exemption measures for third country suppliers.
Supporting the growth of SMEs by simplifying VAT
In addition to the upcoming legislative proposal to modernize and simplify VAT for cross-border e-commerce, as part of the Digital Single Market strategy, the Commission will also present in 2017 an additional package aimed at supporting the growth of SMEs through simplifying the VAT-structure.
The Commission will ask the European Parliament and Council to provide political guidance and confirm their support of the proposals presented in the Action Plan on VAT before presenting legislative proposals in before the end of 2016 and 2017. In the meanwhile, Ecommerce Europe will keep ensuring that the interests of online merchants will be taken into account during the whole process.