The EU 2015 changes on B2C supply of services (telecom, broadcasting and e-services) and the introduction of the Mini One Stop Shop (MOSS) marked a major development in the area of VAT and e-commerce. The e-Commerce VAT package, adopted by the ECOFIN Council on 5 December 2017, picked up on these developments to introduce additional simplification measures for intra-EU sales of electronic services from 2019 onwards, and by 2021 will extend the Mini One-Stop Shop to a One Stop Shop to deal with distance sales of goods to EU consumers. Furthermore, new rules for electronic interfaces such as marketplaces or platforms are introduced, which deem them for VAT purposes (in certain scenarios) to be the supplier of goods sold to customers in the EU, and make them collect and pay the VAT on these sales. In December 2018, detailed implementation rules were published by the Commission in a 'Proposal for a Council Implementing Regulation' and a ‘Proposal for a Council Directive’ which were agreed at a political level at the March 2019 ECOFIN meeting. Both legal texts were formally adopted on 21 November 2019. And in a related move, the EU Council reached political agreement in November 2019 on a set of exchange of payment data rules giving Member States the right to access information collected by payment service providers, such as banks and payment institutions, with a view to assisting in the identification of online VAT fraud. These new rules are due to take effect from 1 January 2024.
Overview of e-Commerce VAT Package
As previously reported the e-Commerce VAT Package was adopted on 5th December 2017.
- the extension of the scope of the Mini One Stop Shop (MOSS) to all types of services as well as to intra-community distance sales of goods - subject to a €10,000 threshold for supplies of goods and TBE services – turning the MOSS into a One Stop Shop (OSS);
- removal of the import VAT exemption for low value consignments, with VAT on distance sales of goods not exceeding €150 from outside the EU being accounted for via an Import One Stop Shop (IOSS); and
- the introduction of special provisions applicable to taxable persons who facilitate certain supplies made by other taxable persons through the use of an electronic interface such as a marketplace, platform, portal or similar means, with the effect that the electronic interface may be deemed to have received and supplied the goods itself.
Summary of new Implementing Regulation (EU) 2019/2026
In summary, the new rules that have now been formally adopted are as follows:
- art 5a defines the meaning of 'indirectly' in respect of when a supplier will be deemed to have 'indirectly intervened' in the dispatch or transport of distance sales of goods (both intra-community and import);
- arts 5b and 54b define when a taxable person is considered to 'facilitate' sales of goods or services made by other taxable persons through the use of an electronic interface;
- arts 41a and 61b introduce specific time of supply provisions for determining when a payment is accepted and therefore in which taxable period supplies by taxable persons facilitating supplies of goods through an electronic interface should be declared;
- arts 54c and 63c set out the type of information to be kept in the records of taxable persons facilitating supplies of goods and services through the use of an electronic interface;
- art 5c is added, incorporating a 'good faith' provision for electronic interfaces, under which an electronic marketplace will not be held liable for any VAT due in excess of that declared where it can demonstrate that it did not know or could not reasonably have known that the information it relied upon was incorrect; and a rebuttable presumption that every seller operating through the interface is a taxable person and that his customer is a non-taxable person;
- a second paragraph is added to art 57e, stipulating that the use of an identification number allocated to an intermediary to handle distance sales of goods imported from third countries is an authorisation enabling him to act as intermediary and cannot be used by him to declare VAT for taxable transactions outside the Import One Stop Shop (IOSS) regime; and
- an amended art 61, which will allow corrections to previous One Stop Shop (OSS) returns to be made in a subsequent return within 3 years of the date on which the initial return was required to be submitted.
Summary of new Directive 2019/1995
In summary, the new rules that have now been formally adopted are as follows:
- art 36b - where an intermediary is deemed to have received and supplied goods sold via an electronic interface, the dispatch or transport of the goods shall be ascribed to the supply made by that intermediary;
- art 136a - where an intermediary is deemed to have received and supplied goods sold via an electronic marketplace, the supply of those goods to that intermediary will be exempt from VAT (zero rated);
- amendments to Chapter 6 Title XII (scope of the One Stop Shop scheme) to allow non-EU suppliers who make use of an electronic interface to make domestic sales of goods from stock held in the EU, and who are deemed to have received and supplied those goods themselves, to use the OSS to account for the VAT due on such supplies; and
- an amendment to art 369zb to align the monthly payment deadline for VAT under the IOSS with the payment deadline for import duty.
Provisions relating to the extension of the scope of the One Stop Shop
For the most part, these provisions are required for the proper functioning of the One Stop Shop, following the extension of its scope. However, a number of changes are proposed which go beyond the mere alignment of these provisions to the extension of the Mini One Stop Shop, such as:
- the use of an identification number allocated to an intermediary to account for distance sales of goods imported from third countries is an authorisation enabling him to act as intermediary and cannot be used by him to declare VAT for taxable transactions outside the Import One Stop Shop regime: on this, a second paragraph is added to art 57e of the Regulation;
- simplified import VAT arrangements where the IOSS is not used – declarant collects from EU customers and pays to Member State monthly;
- to date, if a taxable person voluntarily ceases using the Mini One Stop, it is excluded from the Mini One Stop Shop in any Member State for 2 calendar quarters. This provision is removed from art 57g of the VAT Implementing Regulation as it is not considered useful by Member States and creates additional burdens for the taxable person concerned;
- extension of the filing deadline for One Stop Shop returns from 20 days from period end to the end of the following month;
- the current system of making corrections (resubmitting the VAT return of the tax period to which the corrections relate) will be kept in place for Mini One Stop Shop VAT returns relating to the periods from the 4th quarter of 2017 to the fourth quarter of 2020: the new provisions, which allow making corrections to previous One Stop Shop returns within 3 years in a subsequent VAT return, will apply for VAT returns submitted from 1 January 2021 onwards, and art 61 is amended accordingly;
- the need for declaring the name of the customer has been removed; and
- the mandatory invoice requirement has been removed.
New rules for exchange of e-commerce VAT payment data
The EU Council recently agreed on a set of rules to facilitate the detection of tax fraud in respect of cross-border e-commerce transactions, giving Member States the right to access information collected by payment service providers, such as banks and payment institutions. In addition, a new central electronic system will be set up by the EU Commission for the storage of this payment information, and for the further processing of this information by national anti-fraud officials within the Eurofisc framework. These new rules are due to take effect from 1 January 2024.
A summary of the various e-commerce measures is available on the European Commission’s website via this LINK.
Apart from the exchange of payment data provisions which are due to take effect from 2024, the other measures set out above will apply from 1 January 2021. Businesses are provided with the possibility to register for the One Stop Shop as of 1 October 2020 to allow them to make use of it from 1 January 2021.
For further information or assistance, please contact your normal PwC VAT adviser or the above-mentioned.