The EC Publishes its Proposals for VAT in the Digital Age

On 8 December, the European Commission (EC) published a proposal for a Council Directive on VAT in the Digital Age, aimed at modernising and taking full advantage of technological and digital advances to deliver an update VAT system that is better equipped to prevent illegal VAT practices.The legislation builds on the ‘VAT One Stop Shop’ model for online shopping companies, proposing to extend the OSS to minimise the instances for which a taxable person is required to register in another Member State. The proposal will now be sent to the EU Council of Ministers for agreement and to the European Parliament and the Economic and Social Committee for consultation. This proposal is important for African ecommerce sales to the EU in the future.

The ‘VAT One Stop Shop’ 2.0 concept addresses the gap in the 2021 VAT ecommerce package on the issue of multiple VAT registration for sellers holding stock in different Member States than their home country of registration. The VAT in the Digital Age proposal ensures that businesses selling to consumers in different Member States would only be required to register once for VAT purposes for the entire EU, and to fulfil their VAT obligations via a single online portal in one language. A single VRN can be advantageous not only for the European businesses, but also for Member States’ tax administrations, customs authorities, consumers, marketplaces and the environment. Further measures to improve the collection of VAT include making the ‘Import One Stop Shop’ mandatory for certain platforms facilitating sales to consumers in the EU, referred to as “deemed suppliers”.