The importance of a well-functioning and fraud-proof VAT system for public budgets cannot be understated. Every year, about €1 trillion is collected in the EU Member States in VAT revenue alone, making it the third-highest tax revenue raiser in the EU on average, behind social contributions and personal income tax. VAT is generally lauded for its stabilising role in tax collection: for example, despite the pandemic lockdowns lasting for several months, overall VAT revenue decreased by just 7 % in 2020, compared with pre-pandemic times. Moreover, a (small) part of the VAT collected by the EU Member States is allocated automatically to the EU budget as an own resource, with €18 billion worth of VAT revenue paid into the EU budget in 2021 alone.
At the same time, the rise of e-commerce has required the VAT system to adapt and modernise. The proposal discussed in this briefing focuses mostly on e-commerce sales from third-countries. These represent a considerable share of overall online purchases in the EU. In 2022, 18.5 % of EU e shoppers bought or ordered goods and services from a non-EU seller (see Figure 1). One study estimates that online e-commerce with goods being dispatched from countries outside the EU was worth around €29 billion in the EU in 2020
Be the first to write a comment.