EU VAT changes for e-commerce businesses

The current VAT rules on e-commerce businesses supplying goods across Europe to non-VAT registered customers are explained in our post VAT on drop-shipping. E-commerce VAT Obligations.

Following the VAT Action plan published by the Commission, in coming years there are significant VAT changes for e-commerce businesses to be expected.

According to the proposed VAT changes for e-commerce businesses, goods sold through the internet to private individuals in another member state will charge VAT at the customers´ country VAT rate. However, the supplier will not have to register in the country of the customer. Instead of such registration, the supplier will report these sales and pay the relevant foreign VAT to the tax authorities of his home country, these authorities would subsequently transfer the VAT to the tax authorities of the client´s country. For example, under the proposed changes, if a French company sells shoes online to a German customer, the French supplier will charge German VAT on these sales. This VAT amount will then be reported in the French VAT return and paid to the French tax authorities, who would then transfer the amount to the German authorities.

These changes follow the rules already implemented for B2C services supplied electronically. The Commission is expected to publish a proposal with further details on these changes at the end of 2016. Once implemented, e-commerce companies will no longer require several VAT numbers in different EU countries, instead, they will be able to set a one-stop VAT registration in their home country and report all sales to other member states from one single return.

In addition to the above VAT changes for e-commerce businesses, the VAT Action plan announced changes on reduced VAT rates and plans to revise the current intra-Community VAT rules. These changes are explained in our article: EU publishes VAT Action plan.


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