The European Commission has launched an online public consultation to identify methods to simplify VAT payments on cross-border e-commerce transactions within the EU, with emphasis on small businesses using the Mini One Stop Shop (MOSS).
The consultation consists of a 36-question survey for businesses and other interested stakeholders, to be completed by December 18, 2015. The survey is available at this link. It asks specific questions, and also invites general comments about the application of VAT to cross-border e-commerce.
MOSS is an electronic portal that enables participating businesses to account for VAT on business-to-consumer (B2C) supplies of digital services (such as e-books and distance learning) throughout the EU by submitting a single electronic return to the tax authority of one Member State.
The MOSS is intended to ease the compliance burden resulting from new European place of supply rules, which provide that as of January 1, 2015, all broadcasting, telecommunications, and electronically supplied services supplied to EU non-business customers are deemed to take place in the Member State where the customer “belongs” -- meaning generally, in the case of individual customers, their Member State of residence.
Since its introduction on January 1, 2015 MOSS has been unpopular and MOSS registration rates have been low.
This is particularly the case in the UK, which has the highest VAT threshold in Europe -- currently £82,000. Due to this high threshold, many small e-commerce businesses have not been liable for VAT, and are therefore entirely unfamiliar with it. Some choose not to engage in cross-border sales rather than to register.
The European Commission is seeking public feedback on proposals including the introduction of a VAT threshold to exempt small businesses from the new VAT rules on digital supplies; permitting cross-border businesses to be audited only by their home country for VAT purposes; removing the VAT exemption for small consignment imports from third country (non-EU) suppliers, so as to eliminate their competitive advantage; and the extension of MOSS to supplies of tangible goods.
The European Commission has announced that it intends to introduce legislation in 2016 to reduce the administrative burdens and costs associated with the MOSS.
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by Sergeja Krajnc-Gani, Tax Editor
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