The European Commission released a statement on Friday 7th May that it proposes to postpone entry into application of the VAT e-commerce package by 6 months. The EU commission hopes this will ease the pressure off businesses and member states that are facing bigger challenges in the midst of the Coronavirus crisis.
The new proposed application date will be 1July 2021, instead of the original application date of 1 January 2021. the new launch date will be 1 July 2021. This gives Member States and businesses more time to prepare for the new VAT eCommerce rules.
Background to VAT eCommerce Package
The European Commission aims at simplifying VAT obligations for companies carrying out cross-border sales of goods or services (mainly online) to final consumers and to ensure that VAT on such supplies is paid correctly to the Member State of the customer, in line with the principle of taxation in the Member State of destination. This Regulation provides the details for the registration in the VAT One Stop Shop, including the Import One Stop Shop, and for the VAT One Stop Shop return.
In the same statement, the EU commission also proposed the deferment of deadlines and the exchange of information under DAC. Member States will have three additional months to exchange information on financial accounts of which the beneficiaries are tax residents in another Member State. Similarly, Member States will have three additional months to exchange information on certain cross-border tax planning arrangements.
The EU Commission hopes that European Parliament and Council will adopt the proposed postponements swiftly in order to provide legal certainty to stakeholders.