The Commission is seeking to receive a wide range of views from
business owners and other interested parties before it drafts its
legislative proposals on the topic in 2016, as part of the Digital Single Market strategy.
Andrus Ansip, European Commission Vice-President for the Digital Single Market, said: "We
promised to support companies, and especially smaller ones, to reduce
burdens arising from different VAT regimes. Today we ask businesses and
other stakeholders to help find the most effective and meaningful ways
of delivering on this promise. In the Digital Single Market Strategy we
have already put forward some measures we would like to take, such as a
VAT threshold for startups."
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs said: "This
consultation presents a real opportunity to ensure that future VAT
revenues from the digital economy are distributed fairly and
effectively. At the same time, we want to make it as easy as possible to
comply with the rules. We also have an interest in ensuring that future
legislation reflects the reality for businesses across the EU."
This
consultation is also part of the ongoing assessment of the new rules
for VAT payments on cross-border telecommunications, broadcasting and
electronic services which came into force last January. The Commission
is keen to garner feedback on the associated Mini-One Stop Shop (MOSS),
the tool that allows businesses that sell digital services to customers
in more than one EU country to declare and pay all their VAT in their
own Member State.
The consultation will run for 12 weeks and end on 18 December 2015.
The Digital Single Market Strategy...
In
the context of the Digital Single Market, the Commission is working to
minimise burdens attached to cross-border e-commerce arising from the
different VAT regimes within the EU. It wants to provide a level playing
field for EU companies, big or small, and ensure that VAT revenues flow
to the country where the consumer is based.
The Commission will
make a legislative proposal in 2016 to reduce the administrative burden
on businesses arising from different VAT regimes. The consultation
launched today will feed into preparations for these important proposed
measures.
The Commission will propose simplification measures for
small business including an appropriate threshold which can address the
problems without causing further distortions to the single market or
compliance challenges for tax administrations. Specifically, the
Commission will propose reducing the administrative burden on businesses
arising from different VAT regimes including:
- extending the current single electronic registration and payment mechanism to cover the sale of tangible goods;
- introducing a VAT threshold to help online start-ups and small businesses;
- allowing cross-border businesses to be audited only by their home country for VAT purposes;
- removing the VAT exemption for the import of small consignments from suppliers in third countries.
Current VAT rules for e-services
The
new "place of supply" rules for businesses dealing in cross-border
telecommunications, broadcasting and e-services came into effect on 1
January 2015. This meant that such goods and services would be taxed in
the Member State of the customer buying the product. VAT is a
consumption tax, and these rules aim to ensure that the taxation of
e-services reflect where consumption takes place. In this way, VAT goes
to the treasury of the country where the buyer is based.
As part
of the changes, the Mini-One Stop Shop (MOSS) was set up to simplify
cross-border VAT payment procedures for e-commerce. For the first time,
businesses could register and account for VAT payable to other Member
States through a simplified quarterly online return, hosted by the tax
administration in their own Member State. Preliminary data indicates
that more than EUR 3 billion VAT will be paid through MOSS in 2015
representing approximately EUR 18 billion in sales.
Despite the
broad support for the new rules, some very small businesses have faced
some difficulties, particularly in the UK where they were previously
exempt from VAT up to a threshold. In its original proposal, the
Commission had included a VAT threshold to exempt smaller businesses
from the changes, but Member States rejected that option. The Commission
would like to put that option forward again in order to support the
EU's start up and smallest companies.
