The digital economy has changed the way we do business. EU policymakers are seeking to update VAT policy to meet the realities of the internet age.
Developing a new VAT framework that accounts for the pace and variety of ecommerce and digital services is no simple matter. How do you define the place of supply in an increasingly virtual world? Should online events should receive the same VAT treatment as ‘real life’ events.
Importantly, the ultimate policy proposals don’t just affect governments’ ability to collect revenue. Revised VAT policy can help or hinder business, depending on how it is formulated.
In recognition of the impact of VAT policy on business, and on the public in general, the European Commission has opened a call for evidence. During the feedback period (20 January until 17 February 2022) members of the public can submit feedback on the ‘VAT in the digital age’ framework.
You can submit feedback directly through the European Commission website.
How e-commerce VAT policy affects customers
While consumers don’t have to worry about the ins and outs of VAT legislation, VAT policy nonetheless affects all of us. For example, when the EU recently scrapped the VAT exemption on low value goods, many shoppers noticed a sudden increase in the price of items they bought online.
Evolving VAT policy can also benefit consumers. For instance, the new Import One Stop Shop (IOSS) can improve the online shopping experience. That’s because with the IOSS, shipping is faster and there are no hidden charges. It’s seamless, like internet shopping is supposed to be.
Flexible new options for businesses in the digital age
Modernised VAT policy should, at best, make compliance simpler for online business. For example, the EU VAT e-commerce package introduced the new One Stop Shop (OSS). Many businesses will benefit from expert assistance to get the most out of the OSS. However, when implemented effectively, the OSS greatly simplifies VAT compliance on e-commerce sales. Instead of registering for VAT in multiple countries, you can account for your VAT on e-commerce sales throughout the EU by filing a single electronic VAT return.
Of course, every business has different goals and operational priorities. Effectively adapting to changing VAT regulations, while stating 100% compliant is an ongoing challenge. We’re here to help. Get in touch with the world’s e-commerce VAT specialists for a customised VAT solution and expert strategic advice.