Online platforms will inform Italy about sellers’ activity

The European Commission and individual Member States are increasingly implementing legislative changes to reduce the VAT gap in the online sales industry. Such gap is greater on sales made by non-EU distance sellers, as these sellers often do not pay any VAT, neither on their country of establishment nor in the customer country. Such avoidance allows them a competitive advantage against EU sellers. This is why, as from 2021, the EU will remove the current exemption from VAT of low value imports of goods.

VAT gap on EU businesses is normally due to lack of knowledge of EU rules. These businesses still pay VAT, but they do it in the wrong country. The penalties and consequences for this error are as costly as those applicable to non-EU businesses for not paying VAT at all.

Several countries recently introduced measures to increase control on non-compliant online sellers. Italy joined this trend and will require online platforms such as Amazon or Ebay to provide the following data to the tax authorities on a quarterly basis:

• Name, address, VAT or tax ID number and email address of each seller making sales to Italian clients.
• Total number of units sold in Italy
• Total amount of sales in Italy and average sales price per unit.

The level of detail required by the Italian tax authorities means that , not only you will have to register on time if you are making online sales in Italy, but your VAT returns, Esterometro and VAT rates applicable must be 100% accurate given the capacity of the authorities to double check this information. Intrastat returns are not due in Italy for distance sellers, so these obligations will not be due despite the information available by the tax authorities.

This month, also Denmark announced plans to receive data about online sales from third parties. France had this obligation in place for some years now.  The UK has a dedicated VAT regime for non-EU online sellers and France plans to extend the liability of VAT to Amazon or Ebay when the seller does not comply with EU rules.

More information about VAT obligations on online sales is available in our Frequently Asked Questions section.

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Actions if you are selling online in Italy

If you are an online seller with customers in Italy, you must review urgently your sales volume to this country over last 4 years. On this basis, you must ensure that you are duly VAT registered if you exceeded the distance sales threshold of € 35,000.

Even if you are already registered, you should make sure that your registration date was correctly assessed. The tax authorities will have details of the units sold and VAT rate used, so you should also review the correct VAT rate structure on your online sales.

Contact Marosa for a free consultation on your VAT obligations in Europe as distance seller. Our online sales team will be thrilled to answer your questions.