From 1 July this year, companies that conduct cross-border sales over the Internet are facing major changes in the field of VAT settlement.
First of all, they will not have to register in every member state they sell to, as all VAT formalities will be handled by a one-stop shop.
Secondly, the tax rate will be charged each time according to the rules of the consumer’s country, which will remove the unequal treatment between intra-EU and non-EU transactions. “This is a major reform that will bring many benefits to e-sellers, state budgets and consumers themselves,” says Patrice Pillet from the Directorate General for Taxation and Customs Union (DG TAXUD).
From 1 July this year, new rules on VAT in e-commerce will apply throughout the EU. They will enable EU companies to benefit from a single, simplified system and reduce their administrative burdens and compliance costs (by up to 95%). In today’s system, online businesses are required to register for VAT in every EU country where they want to start selling. Soon they will be able to electronically declare and pay VAT on all intra-EU sales in their home country, in their own language and in a single quarterly return. The tax can be settled through the new One Stop Shop for VAT. Thanks to these simplifications, EU companies can save up to € 2.3 billion a year in tax compliance costs.
- According to our estimates, the savings on this account for internet sellers will amount to between 5,000 and 8,000. euro for each Member State in which they operate, says the head of the VAT department in DG TAXUD.
Import One Stop Shop, on the other hand, will facilitate the collection, declaration and payment of VAT for sellers who deliver goods from outside the EU to customers in the EU. Thanks to this, it is not the customer who will have to pay the import VAT upon delivery of the goods, but the entrepreneur will pay it directly to the tax authorities of his choice. This is to make their lives easier and protect customers from hidden costs.