The VAT proposal on e-publications can enter into force immediately upon approval by the Council. On the VAT e-commerce proposal, first reforms are already foreseen for 2018. Other measures will come into place in 2021 as IT systems need to be developed.
The Commission adopted a package of proposals which will:
- Facilitate cross-border trade
- Combat VAT fraud
- Ensure fair competition for EU businesses; and
- Provide equal treatment for online publications.
What is the Commission proposing to modernise VAT for cross-border e-commerce?
In 2018
- A set of thresholds (EUR 10 000 and EUR 100 000) for cross-border supplies of electronic services will be introduced to help microbusinesses and SMEs. This means in practice that only businesses with cross border sales of more than EUR 100 000 will be subject to the standard rules.
In 2021
- Building on the success of the mini One Stop Shop for electronic services (MOSS), this concept will be extended for online supplies of goods and to all cross-border services to end consumers.
- The intra-EU distance sales regime and the small consignment exemption on imports will be removed in line with the commitment to apply the destination system for VAT.
- The new One-Stop Shop (OSS) will also be extended to imports. Unlike today, VAT can be collected at the point of sale to EU customers by sellers or market places. Non-EU sellers will then declare the VAT using the OSS. These goods will then benefit from a fast-track customs mechanism.
- Where the OSS is not used, a second simplification mechanism will be available to imports–VAT will be collected from customers on importation and a simple monthly declaration to customs will be transmitted by the transporter.
Proposal on VAT Rates for e-books and e-publications
- Under the current VAT Directive, electronically supplied publications (e-publications) must be taxed at the standard VAT rate, unlike traditional printed publications which can benefit from reduced rates. This creates a less favourable regime for electronic publications.
- In its Action Plan on VAT, unveiled on 7 April 2016, the Commission announced that it would present a proposal with regard to VAT on e-publications by the end of 2016. The proposal adopted on 1 December 2016 fulfils this commitment. If accepted, it will allow Member States to apply to e-publications the same VAT rates they currently apply to printed publications.
This proposal was adopted by the Commission together with a proposal on modernising VAT rules on e-commerce activities. Both initiatives are part of the Digital Single Market Strategy (DSM).
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