EU adopts new VAT rules for online sales

Today, the European Council adopted new rules revising the EU’s value-added tax (VAT) system designed to make it easier for internet companies to sell to consumers located in the EU and requiring some sales from third countries to become liable for VAT.

“This revamp of the rules will make our VAT system fit for the digital economy,” said Toomas Tõniste, Minister for Finance of Estonia, which currently holds the Council presidency. “By reducing red tape, we will achieve both cost savings for businesses and increased tax revenues for the member states,” Tõniste said.

The revisions extend the existing mini ‘one-stop shop’ platform to VAT registration of distance sales so that such sellers can avoid having to register for VAT in each EU member state in which they do business. The rules also establish a new portal for distance sales from third countries with a value below €150.

The revisions also make online platforms liable for collecting VAT on sales they facilitate from third countries, making it more likely that the tax will be collected.

Also, the changes remove an exemption for imports of goods in small consignments of negligible value.

Start-ups and SME that have €10 000 in yearly cross-border online sales are permitted to continue to apply the VAT rules used in their home country.

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