Europe adopts new VAT rules for online businesses

As part of the EU’s digital single market strategy, the proposals are aimed at facilitating the collection of VAT when consumers buy goods and services online.“This revamp of the rules will make our VAT system fit for the digital economy”, said Toomas Tõniste, Minister for Finance of Estonia, which currently holds the Council presidency.

“By reducing red tape, we will achieve both cost savings for businesses and increased tax revenues for the member states. This was a major priority for our presidency.”The new rules extend an existing EU-wide online portal, called ‘mini one-stop shop’ for the VAT registration of distance sales, and create a new portal for distance sales from third countries with a value below €150คำพูดจาก สล็อตเว็บตรง. This will reduce the costs of complying with VAT requirements for B2C transactions.VAT will be paid in the member state of the consumer in order to ensure a fairer distribution of tax revenues among member states.Additionally, the changes make online platforms liable for collecting VAT on the distance sales that they facilitate. This was not previously planned by the Council, but it said it ended up being an essential part of the package.According to a press release, most goods that are imported for distance sales currently enter the European Union VAT-free, which is unfair for EU-based businesses. The Council estimates that VAT fraud for distance sales reaches €5 billion per year in the EU.The ‘one-stop shop’ will free online retailers from having to register for VAT in each of the member states they operate. These obligations cost companies around €8,000 for every EU country in which they sell, so the initiative will reduce the cost for companies by 95%.Further, the Commission estimates that the ‘one-stop shop’ will generate an overall saving of €2.3 billion for businesses and a €7 billion increase in VAT revenues for member states.For emerging companies and SMEs, the new rules provide clarity and an easier processคำพูดจาก สล็อตเว็บตรง. Companies with cross-border sales under €10,000 will be allowed to continue applying VAT rules used in its home country.Finally, the new rules abolish the exemption for consignments from outside the EU worth less than €22. About 150 million shipments are imported free of VAT, and the system is open to abuse, according to the Council. While EU businesses have to apply VAT regardless of the value of the goods sold, imported goods benefit from the exemption and are often undervalued in order to do so.The Council also announced a timeline, with the package (including a directive and two regulations) adopted unanimously at a meeting. By 2019, the Council aims to introduce simplification measures for intra-EU sales of electronic services, and extend by 2021 the ‘one-stop shop’ to sales, both intra-EU and from third countries, as well as the elimination of the VAT exemption for small consignments.The provisions that will apply from 2021 will be addressed in more detail in a further Commission proposal in accordance with a non-legislative procedure. The Council also approved a statement highlighting issues to be considered by the Commission in the implementing phase. The provisions that will apply from 2019 are already covered by the package.The member states will have until 31 December 2018 and 31 December 2020 to transpose the corresponding provisions of the directive into national laws and regulations. The regulation on administrative cooperation will apply from 1 January 2021. 

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