A Digital Single Market for Europe – Commission sets out its strategy – Modernizing VAT for cross-border e-commerce

Christoph Zenner 7 May 2015


On 6th May 2015, the European Commission announced its Digital Single Market Strategy for Europe. The aim is to remove the barriers which currently hinder EU based companies to grow and to be (more) competitive with the world’s Internet giants.

In the context of VAT, the Commission should make legislative proposals in 2016 to modernize EU VAT for cross-border e-commerce of goods and services and reduce the administrative burden of businesses arising from different VAT regimes.

The VAT related initiatives include:

  • Extending the single electronic VAT registration and VAT payment mechanism to intra-EU and third country online sales of tangible goods to private customers.
    This system, also known as the VAT Mini One Stop Shop (MOSS) was put in place as of 1 January 2015 for sales of telecoms, broadcasting and electronic services into the EU consumer market. The Commission will review the existing system, take stock of the issues with both tax administrations and businesses, and address these in the context of the 2016 proposals.
  • Introducing a common EU-wide simplification measure (e.g. VAT threshold) to help small start-up e-commerce businesses;
  • Allowing for home country controls including a single VAT audit of cross-border business;
  • Removing the VAT exemption for the importation of small consignments from suppliers in third countries, creating an equal taxation between EU and third country suppliers
  • Exploring how to address the VAT treatment of digital books and online publications in the context of the work being done on the adoption of the definitive VAT regime.

The Strategy does not include specific actions on direct taxation. However, the Commission will present an Action Plan on a renewed approach for corporate taxation in the Single Market, where profits are taxed where value is generated. This Action Plan on corporate taxation is planned to be adopted before the summer.

See also the Press Release, the Questions and Answers (5th item), the Communication (see 2.5) and the Working Document (see 3.6).