EC proposes simplified VAT rules for online business previous message

EC proposes simplified VAT rules for online business

In December, 2016 the European Commission published a proposal containing a simplification of the VAT rules for online business in business-to-consumer (B2C) transactions. The aim is to encourage growth for online businesses by reducing the burden of the VAT compliance and associated costs. The proposal essentially extends the scope of the simplified VAT treatment of e-commerce (e.g. sale of apps) to all online supplied goods and services (web shops).

Current Situation

Businesses selling goods from abroad to end-users in European member states may be obliged to register and file a VAT return in each of these states. In general, this is the case if the transport of the products is on account of the seller and the value of annual sales exceeds a certain threshold (often € 35.000 or € 100.000).

Distance selling

The European Commission proposes to limit the registration and filing to one member state for a distance seller to declare all its European sales. Furthermore, an online portal can be used for filing the periodic EU VAT return. The result is that companies can handle all of their EU wide VAT obligations through an online portal hosted by their domestic tax administration. Under this proposed new system for compliance online businesses will no longer be obliged to register for VAT in every Member State in which they sell goods but instead will make 1 simple quarterly for the VAT due across all the EU via the online VAT One Stop Shop portal hosted by the domestic tax administration of the business.

In order to stimulate growth of small and medium sized companies the proposal includes plans to apply domestic VAT rules (such as invoice requirements) for annual cross-border sales up to € 10.000 for goods and € 100,000 for services.

Way forward

If adopted in its current form, the proposal will take effect in 2018 and 2021. With 2021 being the year in which the simplified rules (one portal) are in place for all online supplied goods and services.

For more information please contact Guido van Asperen (+31 615041623 or

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