As part of its digital single market strategy, and its action plan on value added tax (VAT), the European Commission has proposed measures that should make it easier and cheaper for companies to trade online. The Commission estimates that the measures could lead to annual savings of about €2.3 billion for online traders and they could be particularly judicious for small companies. They currently have to register for VAT in each of the countries in which they deliver their products through online sales, which is estimated to cost about €8,000 per country. The Commission aims to create a “one-stop shop” meaning that companies could take care of VAT requirements for online trading around the EU through one single quarterly return. Under the proposal, online traders may continue to apply the VAT rules of their own country for online sales to other EU countries of less than €10,000 per year, and other simplified rules would apply for online sales to other EU countries of less than €100,000 per year. Furthermore, the Commission wants to remove an exemption under which consignments imported into the EU that are worth less than €22 are currently exempt from VAT. It estimates that the proposals would help member states to recoup the current estimated €5 billion of lost VAT on online sales every year – a loss that is projected to increase to €7 billion by 2020, thus requiring immediate action, the Commission adds. The Commission says it has already proposed to make parcel delivery cheaper and more efficient, to increase the protection of consumers who buy online, and to tackle what it describes as “unjustified geo-blocking.” More on this in the next issue of SGI Europe.

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