EU consultation on modernising VAT for cross-border e-commerce

In furtherance of its Digital Single Market strategy (the “Strategy”), the European Commission (the “Commission”) has recently launched a consultation on modernising the EU VAT regime to better cater for cross-border e-commerce between businesses and end consumers (“B2C”). The Strategy acknowledges that dealing with different national VAT systems throughout the EU represents a barrier to cross-border trade and through the consultation process the Commission is seeking the views of businesses and other interested parties prior to the implementation of changes to the regime.

As part of the consultation, the Commission is seeking views on:

  • the current VAT rules for B2C cross-border supplies of goods and services;
  • the effectiveness of the January 2015 changes to the VAT place of supply rules and the mini one stop shop (“MOSS”); and
  • the Commission’s proposals to:
    • extend MOSS to B2C sales of goods;
    • introduce a common VAT registration threshold for micro and small businesses – simplifying early-stage VAT compliance for smaller businesses;
    • allow ‘home country’ auditing of cross-border sales activity; and
    • abolish low value consignment relief on the importation of goods from non-EU suppliers.

The consultation can be found here.

Click here to read our detailed briefing on the consultation.

Our recommendation

The opportunity to make representations to the Commission on how the current VAT rules affect your business and how the rules could be improved may be of particular interest to online marketplace platforms and reward based crowdfunding platforms, where the changes to the place of supply rules and the introduction of the MOSS may have had unforeseen consequences. For businesses not affected by the January 2015 changes, but who will be affected by the Commission’s proposals, the consultation represents an opportunity to input into the design of the legislation. We will be making a representation to the Commission as part of the consultation and we would be happy to incorporate your comments into our submission.