News from the EU – from Accountancy Europe – September 2021
New VAT for e-commerce rules enters into force
The new EU VAT rules applicable as of 1 July aim to simplify cross-border e-commerce.
Some of the new changes include:
- Removal of the EUR 22 exemption for extra-EU small consignments
- Establishment of one common EU threshold of EUR 10,000 above which the VAT must be paid in the Member State where the goods are delivered
- Online sellers may register for an electronic portal called ‘One Stop Shop’ (OSS) where they can take care of all of their VAT obligations for their sales across the whole of the EU
The rules will impact many SMEs in Europe, which is why Accountancy Europe with the help of DG TAXUD prepared a publication to inform SMEs’ accountants about them.
Commission postpones digital levy into the autumn
The digital levy, which was supposed to co-exist with an international Pillar 1 agreement and provide direct funding for the EU’s own coffers has been postponed into the autumn, following strong pressure from US administration.
The US had argued that the digital levy is discriminatory and threatens to undermine global efforts for an international tax reform agreement. A final international agreement is expected to be reached in October at latest. It remains to be seen whether and in what form the Commission will then propose the digital levy.
According to latest information, the levy would put a 0,3% tax on businesses operating in the EU with online sales of at least EUR 50 million.
EU finance ministers discusses VAT rates reform
There was no meaningful progress on the proposed VAT rates reform at the 18 June meeting of EU finance ministers. The rates reform would grant EU Member States more freedom in setting their national VAT rates.
The Portuguese Presidency proposed to include a ‘standstill clause’ that would allow all Member States to continue to apply their current VAT derogations on reduced, zero and super-reduced rates, save those harmful to the environment.
Belgium, Estonia, Ireland, Greece, Spain, Croatia, Slovenia, Lithuania, Finland, Slovakia, Poland, the Czech Republic, Bulgaria, Romania and Luxembourg showed their support for this Presidency compromise. But notably France, Germany and Sweden objected, fearing it would open the door for new derogations.
Most Member States supported Portugal’s proposal of phasing out environmentally harmful goods from reduced rates, including pesticides, chemical fertilisers, firewood and natural gas.
Finance ministers progress on COVID VAT alleviations file but no conclusion yet
At the same meeting, ECOFIN welcomed the Portuguese Presidency’s proposal to limit the EC’s proposal to exempt from VAT the goods and services that the EU makes available to Member States and citizens in times of crisis to the COVID crisis only. The EC regretted the Council’s limitation to COVID.
After the meeting, the Portuguese Presidency welcomed progress made but lamented that there was for now no unanimity. All Member States reportedly agreed that progress on this file should be swift but no timeline for progress was provided.
Parliament agrees to new implementing powers to the Commission on VAT
Study: VAT gap, reduced VAT rates and their impact on compliance costs for businesses and consumers