Modernising VAT for cross-border e-commerce - a BusinessEurope position paper

Key messages

• BusinessEurope welcomes the proposal for a directive regarding modernising VAT for cross-border B2C e-commerce. The proposed measures have the potential to support the digital economy when it comes to VAT compliance. BusinessEurope subscribes to the view of the European Commission that VAT rules need to be updated in order to encourage online businesses to expand cross-border and thus foster economic growth and job creation. We support in particular the broadening of the Mini-One-Stop-Shop (MOSS) to all B2C distance sales of goods and services, which can relieve administrative burden for businesses significantly. We encourage the Commission to take note of the fast-moving developments in the digital services when considering further VAT reform proposals.
• BusinessEurope also supports the introduction of a uniform threshold for these sales and services for intra-EU trade, but we would recommend a higher threshold level to further meet the needs of start-ups and other small businesses. For businesses – and SMEs in particular – the following aspects are also key: the reliance of the Member State of identification on audits (home country audits), the application of the invoicing rules of the Member State of identification, an easier error correction process, applying the record keeping rules of the Member State of identification. While we welcome the soft landing for identification of customer location, we would like to see this measure broadened to all businesses. Additionally, businesses would also significantly benefit from a one-stop-shop that covers both input and output VAT.
• We support the efforts to achieve a level playing field with the removal (or significant reduction) of the VAT exemption for the import of small consignments, but we request close and prior cooperation with all relevant parties in the shipping chain, especially the postal sector and couriers, in order to achieve an adequate solution of resulting major concerns (liabilities for the VAT, recovery of additional import administrative costs).

Key facts and figures

• Online cross-border sales in the EU are worth €96 billion a year. (Source: European Commission)
• Some €5 billion of VAT is lost each year in the EU due to non-compliance on cross-border online sales. (Source: European Commission)