New EU rules for VAT to generate savings of €2.3bn for businesses

The finance ministers of the European Union have agreed on simplified tax rules for online retailers. Instead of registering for VAT in each EU country, online retailers in the future will be able to file a single tax return for the entire European Union. This should reduce costs for e-commerce companies and increase the tax revenues of EU countries.

Toomas Tõniste, Minister for Finance of Estonia, said that this revamp of the rules will make the VAT system in Europe fit for the digital economy.

The new rules also mean online retailers are no longer obliged to register for VAT in each of the member states in which they sell goods. Based on information from the European Commission, such obligations cost companies around €8,000 for every EU country into which they sell.

The Commission estimates that the one-stop shop will generate an overall saving of €2.3bn for businesses and a €7bn increase in VAT revenues for member states.

The new rules are expected to simplify the procedures for start-ups and small and medium-sized enterprises. Below €10,000 in yearly cross-border online sales, these companies will be able to continue applying VAT rules used in its home country.

The new rules also remove an exemption for parcels from outside the EU that are worth less than €22. Around 150m of these small consignments are currently imported free of VAT and many retailers are abusing the current system. Whilst EU businesses have to apply VAT regardless of the value of the goods sold, imported goods benefit from the exemption.

Source: Ecommerce News Europe