E-commerce changes proposed under ViDA
E-commerce changes proposed under ViDA
According to the European Commission the changes in the field of e-commerce applicable since 1 July 2021 have been largely succesfull. However there is some need for improvement which is incorporated in the ViDA proposals. The proposed changes cover:
1. A further clarification of the simplification applying to small businesses. For small businesses established in one EU Member State EU distance selling rules do not apply if their turnover does not exceed 10.000 euros in the current and preceding year. Distance selling rules require business to charge VAT in the EU Member State of arrival of the goods in case of B2C-supplies within the EU. For small businesses this rule does not apply if they meet the requirements mentioned above. It is clarified under ViDA that only EU distance sales of goods supplied from the Member State where the supplier is established are covered by the simplification and are to be included in the threshold. These rules apply as of 1 January 2026.2. An extension of the OSS to cover all B2C-supplies of services. Under OSS it is possible to file a single VAT return in a single EU Member State which will subsequentlly forward the VAT return and VAT payment to the Member State where VAT is due Currently B2C-services supplied to consumers living outside the EU, but which are subject to VAT in an EU Member State cannot be reported under OSS. This will change. This will apply as of 1 January 2026.
3. Corrections under the OSS must be made in the next VAT return under the scheme. However under ViDA it is proposed that when the deadline for filing the OSS return has not yet passed corrections can still be made by correcting the original VAT return. This will apply as of 1 July 2027.
4. The tax point is harmonized where transactions are reported under the OSS. EU Member States may no longer deviate from the rules which determine at what moment VAT becomes due for supplies reported in the OSS. This will apply as of 1 January 2026.
5. Changes to secure the correct use of I-OSS (Import One Stop Shop) Businesses supplying goods to consumers originating from outside the EU (which should be imported in the EU) can opt to use the I-OSS. If I-OSS is applied the supply of the goods will be subject to VAT in the Member State of arrival of the goods (i.e. the country of the consumer) and an exemption for VAT on import is granted. The VAT due on the supplies can – like under the OSS – be reported in a single VAT return and the payment of VAT will also be made to a single EU Member State, which will forward both payment and VAT return to the Member State where VAT is due. Because the exemption for VAT on import is sensitive to fraud, several measures are proposed under ViDA:
- linking the consignment number with the I-OSS number provided to the business using the I-OSS. This change enters into application with immediate effect from the entry into force of the Directive. This date will have to be set.
- Granting customs authorities access to information about the IOSS registered trader. This will improve risk management and control capabilities of customs authorities. This will apply a of 1 July 2027. As of 1 July 2030 they will also get access to central VIES.
- The total value of goods imported under the IOSS scheme per IOSS identification number per Member State of consumption will be exchanged between Member States. This enhances controls. This will apply as of 1 January 2025.
6. Requests of EU Member State to obtain data from platforms should go through the Member State of identification. Platforms are quired to keep records about sellers and their transactions which should be provided at the request of EU Member States. Under ViDA it is proposed that in case those records are to be obtained the Member State of identification coordinates this. However untill autmatic access to these records is available a Member State can obtain these records directly from the taxable person on a regular and systematic basis. The Commission will assess the possibility of an automated access to data. Member States must accept the use of a standard form used by platforms to provide the information. Next to the information that already needs to be kept at the moment, platforms will also need to record information about the seller when the deeming provision applies (we already addressed this deeming provision in an earlier article) and they also need to record the place where the transport of goods starts in case of supplies of goods in case the deeming provision does not apply. These rules enter into force on 1 July 2027.
BDO’s observations
In BDO’s view the changes proposed under ViDA regarding the e-commerce rules can be welcomed as they clarify issues that are currently unclear and address the substantial risks of fraud with the I-OSS. It is important for businesses, including digital platforms, to make sure that they prepare for the entry into force of this new legislation once adopted. We may expect that there will be no additional changes, since Estonia only objected to the platform economy part of the ViDA proposal.
More information
On 5 November 2024 the EU Member States reached an agreement on the ViDA proposal. This will result in significant changes in the field of VAT in the future.More information