New details announced by EC regarding VAT for online marketplaces.
The European Commission (EC) has announced new detailed measures that will pave the way for a smooth transition to new VAT rules for e-commerce that come into force in January 2021.
The rules lay out the steps needed to ensure online marketplaces can play their part in fighting tax fraud and to ease administrative burdens for online distance sellers.
The new measures should help the Member States recover the €5 million in tax revenues lost each year = a figure due to rise to €7 billion by 2020.
Implementing the rules will ensure a brand new VAT system is ready for e-commerce businesses once the agreed new framework comes into place in 2021. The electronic business portal for VAT or 'One-Stop Ship' put in place allows companies to deal with their VAT obligations in the EU through one online portal in their own language.
Without this, VAT registrations would be required in each EU Member State into which they want to sell - something that many companies see as one of the biggest barriers for small businesses trading cross-borders.
From 2021, large online marketplaces will be responsible for ensuring VAT is collected on sales of goods by non-EU companies to EU consumers. Since online marketplaces will be liable for the missing VAT, authorities can be certain that they can claim the tax due when sellers from outside the EU have not complied with the rules.
These new rules will ensure goods sold from storage facilities within the EU will have the correct VAT charged.
Looking for more information on what your VAT obligations are as an online retailer? Find out more information below.
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