VAT: New details on rules for e-commerce presented, including a new role for online marketplaces in the fight against tax fraud
The Commission today announced new detailed measures that will pave the way for a smooth transition to new Value-Added Tax (VAT) rules for e-commerce that come into force in January 2021.
Today’s rules lay out the steps needed to ensure that online marketplaces can play their part in the fight against tax fraud and to ease administrative burdens for businesses selling goods online. From 2021, large online marketplaces will become responsible for ensuring that VAT is collected on sales of goods by non-EU companies to EU consumers taking place on their platforms. Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “The EU is gearing up for a brand new VAT system in 2021 to make it easier for companies to sell goods online and for Member States to recoup lost VAT revenues. Today’s proposals will allow online businesses to flourish while ensuring non-compliant businesses or fraudsters cannot undercut them. For this to happen, it is crucial that online marketplaces play their part.” Today’s proposals clarify the rules that govern this liability when it comes to VAT on online sales and the records that the marketplaces themselves must keep. In this way, authorities will be sure that they can claim the tax due when sellers from outside the EU have not complied with the rules. In particular, the new rules will ensure that goods sold from so-called ‘fulfilment centres’ within the EU will have the correct amount of VAT charged, even when the goods are technically being sold to consumers by non-EU businesses. Forming part of the EU’s broader agenda to tackle VAT fraud and to improve VAT collection on internet sales, the new measures presented today should help Member States to recover some of the €5 billion in tax revenues lost in the sector each year – a figure due to rise to €7 billion by 2020. A press release is available here.