EU VAT changes for eCommerce businesses | Vertex Exchange Europe 2019 | World Finance


Aleksandra Bal: The European VAT system is
changing all the time. And one of the major reforms of the last years
is the VAT e-commerce package. The objective is to modernise the European
VAT system, to make it fit for the modern economy, and of course to lower the associated
compliance burden for online traders. The VAT e-commerce package will affect sellers
– both resident and non-resident – that provide electronic services and goods to European
private individuals. Some provisions of the e-commerce VAT package
took effect in January of this year, but the main part will become effective in January
2021. The first main thing that will change is that
the distance selling regime will disappear. Currently, when European businesses sell goods
to consumers in other member states, they have to register there if they exceed certain
thresholds. This means you may end up having 27 registrations
and filing complications in 27 member states. And that of course increases the cost of compliance. Under the new rules, life will be simpler. You will no longer need to have 27 registrations. You will be able to register in one member
state, and do all your filings there. And, if your revenue is below a certain threshold
– if it doesn’t exceed €10,000 – you may even use your home country rules to calculate
VAT. Another important provision of the VAT e-commerce
package is about online platforms. Online platforms will be involved in VAT collection
on the sales they facilitate. Currently, when you as a seller supply goods
via an online platform, there’s only one transaction: seller to customer, and the platform acts
as an intermediary, facilitating the transaction. Under the new rules, there will be two transactions. The seller will sell to the platform, and
the platform will resell to the consumer. And this of course means there will be more
compliance burden for online platforms, but life will be simpler for online sellers. So, just like with any reform, we will have
both winners and losers. Thanks for watching. Click now for more videos from Vertex Exchange
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