The VAT treatment of supplies of goods and services in the digital economy continues to be an area of challenge and change, affecting businesses around the world.
On 5 December 2017, the European Union (“EU”) adopted new legal provisions affecting both EU and non-EU businesses involved in selling goods cross-border to EU consumers (“distance sales”). The provisions will in many cases change the VAT compliance obligations for such businesses, as well as extend VAT compliance obligations in certain circumstances to businesses which facilitate distance sales, such as online platforms and marketplaces.The changes are significant but, for the most part, they will not enter into effect before 1 January 2021.
Some simplification measures affecting the current regime for B2C supplies of digital services will come into effect on 1 January 2019.However, the measures set out above in respect of distance sales of goods will come into effect on 1 January 2021.How the measures will work in practice still need to be drawn up but early indications are that they will closely follow the approach taken in the regulations for the 2015 changes for telecoms, broadcasting and electronic services.
While 2021 may seem some way off, businesses involved in or which facilitate distance sales of goods to consumers in the EU should begin to consider the implications of these measures for their business.KPMG can assist with the assessment and implementation of these changes in your business.
Perhaps more urgently, however, the coming months will be critical for engaging with the European Commission and governments on the development of detailed implementing regulations.KPMG has already engaged with the key stakeholders on the development of these measures and will continue to do so.We would welcome your input into this process.
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