EU: New VAT measures for cross-border online sales | KPMG | GLOBAL

EU: New VAT measures for cross-border online sales

EU: New VAT measures for cross-border online sales

The European Commission today announced an agreement reached by the Economic and Finance Ministers of the EU Member States for a new value added tax (VAT) system for companies making online sales into the EU.


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According to an EC release, the new VAT system will make it easier for consumers and businesses to buy and sell goods online and across borders, and it will help EU Member States to recoup the current estimated €5 billion of VAT lost on online sales every year.

New VAT rules

The new VAT rules will be phased in, so that by 2021 the new measures:

  • Simplify VAT rules for start-ups, micro-businesses and SMEs selling goods to consumers online in other EU Member States. VAT on cross-border sales under €10,000 a year will be handled according to the rules of the home country of the smallest businesses. SMEs will benefit from simpler procedures for cross-border sales of up to €100,000 annually. These measures will be effective by 1 January 2019.
  • Allow all companies that sell goods to their customers online to deal with their VAT obligations in the EU through one easy-to-use online portal in their own language. Without the portal, VAT registration would be required in each EU Member State into which they want to sell.
  • Make large online marketplaces responsible for determining VAT is collected on sales on their platforms that are made by companies in non-EU countries to EU consumers. This includes sales of goods that are already being stored by non-EU companies in warehouses (“fulfilment centres”) within the EU that are often used to sell goods VAT-free to consumers in the EU.
  • Address the problem of fraud caused by a previously misused VAT exemption for goods valued at under €22 coming from outside the EU. This will address instances when high value goods are mislabeled in small packages as having a value under the threshold of €22, making the goods exempt from VAT (and resulting in lost revenue for the EU Member States).

The new rules will provide that VAT is paid in the EU Member State of the final consumer and will implement a new approach to VAT collection in the EU.


Read a December 2017 report prepared by the KPMG member firm in Belgium

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