18.03.2022

Circular 14/2022 – EU consultation on VAT in the digital age – Feedback needed until 15 April 2022

Alexis - Alexis.Waravka@IndependentRetailEurope.eu - +32 2 739 60 92

The European Commission organises a consultation on fitness of the VAT system for the digital age, with a set of questions on (i) VAT reporting obligations and e-invoicing; (ii) the VAT treatment of the platform economy; and (iii) the use of a single EU VAT registration (particularly relevant for retailers selling cross-border online). We have prepared a draft reply to the consultation, on which we ask members to send us their comments until 15 April 2022.

 

Content of the EU consultation on VAT in digital age

The European Commission organises a consultation on the fitness of the VAT system for the digital age. Acknowledging the complexity of the EU VAT system (making it prone to frauds and burdensome for businesses), the consultation is part of a broad reflexion on how to make it easier for business to comply with, how to make it more fraud-proof, and how to adapt the VAT system in order to benefit from the latest digital and technological developments.

As part of this reflexion, the consultation covers the following areas:

  • possible modernisation of VAT reporting obligations and extension of e-invoicing;
  • need to adapt the VAT treatment of the “platform economy”; and
  • necessity to facilitate VAT registration and compliance, including through a revision of the existing rules requiring the registration of non-established taxpayers, the One-Stop-Shop (OSS) and the Import One-Stop-Shop (IOSS). The single VAT registration in the EU is an ongoing process linked to the changes introduced on 1 July 2021 for e-commerce, thus needing an evaluation.

 

Reply to the consultation – Feedback welcome by 15 April 2022

We have prepared a draft reply to the questionnaire of the EU consultation, where we:

  • hint that regulatory fragmentation concerning the introduction of digital reporting requirements across Member States creates unnecessary burdens and obstacles for retailers and should be reduced;
  • support answers hinting at the need for EU action to further reduce the need for retailers to hold multiple VAT registrations across the EU (i.e. to complement the existing One Stop Shop);
  • support further actions linked to the Import One Stop Shop to further reduce the risk of VAT fraud and level the playing field between EU and non-EU retailers selling online.

However, in order to provide a more complete reply to the consultation, we need additional feedback from members on some particular aspects. We therefore ask members to send us by no later than 15 April 2022 feedback on the following aspects:

  • your comments on the reply already indicated in the draft reply and in the comments indicated on the margins of the draft reply;
  • comments on whether you would welcome EU harmonisation of digital VAT reporting requirements;
  • feedback on your experience of the VAT one-stop-shop mechanism (for cross-border intra-EU online sales), and whether the EU should adopt additional actions to further reduce the need for retailers to hold multiple VAT registrations across the EU;
  • of you think that the current Import One Stop shop contains gaps that allow non-EU retailers to sell online without respecting their VAT/custom duties obligations;
  • concerning the part of the questionnaire on the platform economy, whether you see a risk that the closed platforms operated by groups of independent retailers for their members to sell online may be considered ‘deemed suppliers’ for VAT purposes (e.g. if they sell services to consumers) – and what would be the impact in such a case.