Proposal for a simplification of VAT rules for e-commerce (imports) [EU Legislation in Progress]

Written by Pieter Baert (1st edition).

The rise of e-commerce has required the system of value-added tax (VAT) to adapt and ensure that the rules allow for a smooth and fraud-proof transaction between customer and seller. The major overhaul of the VAT rules for e-commerce in 2021 introduced a series of important simplifications for businesses, such as the creation of an import one-stop shop (IOSS). The IOSS allows businesses to declare and remit VAT on all their business-to-consumer (B2C) distance sales of imported goods across the EU (i.e. goods bought online by a customer established in the EU with the goods dispatched from a third country) through one single VAT return, rather than in each country where they make a sale. However, at the moment, the IOSS operates with a threshold, whereby the distance selling of goods with a value above €150 cannot be declared in the IOSS.

Having assessed that the €150 threshold constitutes a burden to businesses, the Commission proposed on 17 May 2023 to further expand the IOSS by removing the threshold entirely. This change would open the use of the IOSS to a wider range of businesses, which would benefit from lower compliance costs. The proposal is subject to a special legislative procedure, requiring unanimous support in the Council, following consultation of the European Parliament and the European Economic and Social Committee.

Versions

• June 2023: Proposal for a simplification of VAT rules for e-commerce (imports) (1st edition)