Explanatory Memorandum to COM(2018)821 - Amendment of VAT Implementing Regulation 282/2011 as regards supplies of goods or services facilitated by electronic interfaces and related special schemes

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dossier COM(2018)821 - Amendment of VAT Implementing Regulation 282/2011 as regards supplies of goods or services facilitated by electronic ...
source COM(2018)821 EN
date 11-12-2018


1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

Article 397 of Council Directive 2006/112/EC 1 (“the VAT Directive”) provides that “the Council, acting unanimously on a proposal from the Commission, shall adopt the measures necessary to implement this Directive”.

On that basis, Council Regulation (EU) No 282/2011 2 (“the VAT Implementing Regulation”) provides binding rules on the application of certain provisions of the VAT Directive. More in particular, Section 2 of Chapter XI of this Regulation lays down detailed provisions for the application of the special schemes for non-established taxable persons supplying telecommunications, broadcasting or electronic services to non-taxable persons, as defined in Articles 358 to 369k of the VAT Directive (the so-called “mini One Stop Shop”). The mini One Stop Shop allows suppliers of such services to use a web portal in the Member State in which they are identified to account for the VAT due in other Member States.

On 5 December 2017, the Council adopted Directive (EU) 2017/2455 3 (“the VAT e-commerce Directive”) amending the VAT Directive which, inter alia:

–Extends the scope of the mini One Stop Shop to all types of services as well as to intra-Community distance sales of goods and distance sales of goods imported from third territories or third countries, turning the mini One Stop Shop into a One Stop Shop;

–Introduces special provisions applicable to taxable persons who facilitate certain supplies made by other taxable persons through the use of an electronic interface such as a marketplace, platform, portal or similar means.

The objective of this proposal is to lay down detailed implementation rules needed to support these amendments to the VAT Directive which apply from 1 January 2021. This is achieved through an amendment to the VAT Implementing Regulation.

• Consistency with existing policy provisions in the policy area

This proposal lays down detailed provisions required to implement the VAT e-commerce Directive which is part of the VAT Action Plan 4 .

• Consistency with other Union policies

In addition to the VAT Action Plan, the VAT e-commerce Directive has been identified as a key initiative in the Digital Single Market Strategy 5 as well as in the Single Market strategy 6 and the E-Government Action Plan 7 .

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

This proposal is based on Article 397 of the VAT Directive. This Article provides that the Council, acting unanimously on a proposal from the Commission, shall adopt the measures necessary to implement this Directive.

• Subsidiarity (for non-exclusive competence)

The proposal amends the detailed provisions required for the proper functioning of the mini One Stop Shop laid down in the VAT Implementing Regulation, following the extension of its scope. The functioning of the One Stop Shop relies on an EU-wide IT system allowing the electronic exchange of VAT registration and VAT return information between Member States, which must be based on harmonised detailed legal provisions. Furthermore, it implements the provisions included in the VAT e-commerce Directive concerning taxable persons who facilitate supplies of goods or services, through the use of an electronic interface such as a marketplace, platform, portal or similar means. These provisions have to be applied in a harmonised way by all Member States in order not to create loopholes that could generate revenue losses.

The proposal therefore complies with the subsidiarity principle.

• Proportionality

This proposal is necessary to adapt the VAT Implementing Regulation to take account of the provisions of the VAT Directive as amended by the VAT e-commerce Directive. The proposal is consistent with the principle of proportionality, i.e. it does not go beyond what is necessary to meet the objectives intended by the VAT e-commerce Directive.

• Choice of the instrument

The proposal amends Council Implementing Regulation (EU) 282/2011 laying down implementing measures for the VAT Directive.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

• Ex-post evaluations/fitness checks of existing legislation

The Impact Assessment accompanying the Commission proposal resulting in the adoption of the VAT e-commerce Directive contained an evaluation of the mini One Stop Shop which, inter alia, identified a number of shortcomings such as the complexity for taxable persons to make corrections to VAT returns. These shortcomings have been addressed in the VAT e-commerce Directive but require detailed implementing provisions to be laid down in the VAT Implementing Regulation.

• Stakeholder consultations

The Commission undertook several consultation rounds with Member States’ authorities, both from the tax administration and the customs administration, within the framework of the Group on the Future of VAT. It also met with the businesses concerned both in the framework of the VAT Expert Group and at targeted meetings with electronic interfaces and postal operators. Finally, a dedicated Fiscalis 2020 Workshop took place in March 2018 in Malta where representatives of the tax and customs authorities and of the business sectors concerned jointly discussed the issues arising from the implementation of the VAT e-commerce Directive.

• Collection and use of expertise

There was no need for external expertise.

• Impact assessment

The measures concerned are of purely technical nature and are merely setting out the application of the provisions adopted by the Council. Hence, there has been no need for an impact assessment.

• Regulatory fitness and simplification

This proposal implements the VAT e-commerce Directive which extends the scope of the mini One Stop Shop to all cross-border business-to-consumer supplies of services as well as to distance sales of goods (both intra-EU and from third countries or territories to the EU). The One Stop Shop is an important simplification for the suppliers concerned in that it allows declaring and paying VAT in a single Member State on all supplies made to customers in other Member States. This is particularly relevant for SMEs for whom the cost of compliance with VAT obligations is relatively more important than for larger companies.

4. BUDGETARY IMPLICATIONS

This proposal has no budgetary implications.

5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

Implementation will be overseen by the Standing Committee on Administrative Cooperation (SCAC), supported by its IT subcommittee, the Standing Committee on Information Technology (SCIT).

• Detailed explanation of the specific provisions of the proposal

Contents

1.

1. Indirect intervention of the supplier in the dispatch or transport


Article 14 i of the VAT Directive as amended by the VAT e-commerce Directive defines ‘intra-Community distance sales of goods’ and ‘distance sales of goods imported from third territories or third countries’. These definitions also cover supplies of goods where the supplier intervenes indirectly in their dispatch or transport to the customer. To ensure the correct and uniform application of these definitions, it is necessary to define the meaning of ‘indirectly’. So far, this notion has only been clarified in guidelines of the VAT Committee. The proposal inserts the text of these guidelines in the VAT Implementing Regulation to enhance legal certainty for both economic operators and tax administrations (Article 1, point (1)(b), adding a new Article 5a to the Regulation).

2.

2. Provisions relating to electronic interfaces


Articles 14a and 242a of the VAT Directive as amended by the VAT e-commerce Directive introduce specific provisions for electronic interfaces such as a marketplace, platform or portal facilitating certain supplies of goods or services made by other taxable persons. In the statements included in the Council minutes when adopting the VAT e-commerce Directive, the Council invited the Commission to propose the necessary implementation rules for the application of these provisions, considering the following elements:

–Definition of the situation in which a taxable person is considered to facilitate sales of goods or services through the use of an electronic interface (this is proposed in Article 1, point (1)(b), adding a new Article 5b to the Regulation and point (4), adding a new Article 54b to the Regulation);

–Specific provisions on the conditions for determining when the payment is accepted to determine in which taxable period supplies by taxable persons facilitating supplies of goods in the Community through an electronic interface or by any taxable person making use of the special scheme for distance sales of goods from third territories or third countries should be declared (this is specified by Article 1, point (3), adding a new Chapter Va and Article 41a to the Regulation and point (5), adding a new Article 61b to the Regulation);

–The type of information to be kept in the records of taxable persons facilitating supplies of goods and services in the Community through the use of an electronic interface. Account should be taken of what information is available to such taxable persons, is relevant to tax administrations and is proportionate to the purpose of the provision, as well as of the need to comply with the General Data Protection Regulation (EU) 2016/679 (see Article 1, points (4), adding a new Section 1a and Article 54c to the Regulation).

Further to the discussions with Member States’ authorities and businesses, Article 1, point (1)(b) inserts a new Article 5c in the VAT Implementing Regulation specifying that:

–When an electronic interface is deemed to have received and supplied goods itself, it shall not be held liable for the payment of any amount of VAT in excess of the VAT which it declared and paid on sales made through the electronic interface. Such a provision is required in order to allow Member States to release electronic interfaces from additional VAT payments where the electronic interface depends on information provided by the supplier selling goods through the electronic interface and can prove that it acted in good faith;

–Any supplier selling goods through the interface shall be presumed to be a taxable person and his customer to be a non-taxable person. This presumption releases the interface from the burden of having to prove the status of the seller and customer.

3.

3. Provisions relating to the extension of the scope of the One Stop Shop (Article 1, point (5), replacing Section 2 of Chapter XI of the VAT Implementing Regulation)


Most of these provisions update Section 2 of Chapter XI of the VAT Implementing Regulation, laying down implementing provisions required for the proper functioning of the mini One Stop Shop, following the extension of its scope.

In addition, as a result of the stakeholder consultation, a number of changes are proposed which go beyond the mere alignment of these provisions to the extension of the scope of the mini One Stop Shop. These changes relate to the following issues:

(a)Article 369q of the VAT Directive as amended by the VAT e-commerce Directive provides that the Member State of identification shall allocate an identification number to an intermediary acting in the name and on behalf of a taxable person using the One Stop Shop for distance sales of goods imported from third territories or third countries. A second paragraph is added to Article 57e of the VAT Implementing Regulation clarifying that this identification number is an authorisation enabling him to act as intermediary and cannot be used by the intermediary to declare VAT on taxable transactions.

(b)Article 57g of the VAT Implementing Regulation provides that where a taxable person voluntarily ceases using the mini One Stop Shop regardless of whether he continues to supply goods or services which can be eligible for its use, he shall be excluded from the mini One Stop Shop in any Member State for two calendar quarters. This provision is removed as it is not considered useful by Member States and may create additional burdens for the taxable persons concerned.

(c)The VAT e-commerce Directive allows making corrections to previous One Stop Shop VAT returns, within three years, in a subsequent return instead of having to re-submit the return of the tax period to which the corrections relate, as is the case in the mini One Stop Shop. The VAT e-commerce Directive does however not specify how corrections to returns relating to tax periods preceding 1 January 2021 have to be made as of 2021. To limit the IT impact of the changeover from one system to another, it is preferable to keep in place the current system for making corrections to mini One Stop Shop VAT returns relating to the periods from the fourth quarter of 2017 to the fourth quarter of 2020. The proposal amends Article 61 of the VAT Implementing Regulation accordingly.

(d)Under the One Stop Shop, corrections to previous VAT returns will have to be submitted in a subsequent return. Once the final VAT return has been submitted, it will no longer be possible for a taxable person excluded from the One Stop Shop pursuant to Article 61a of the VAT Implementing Regulation to submit subsequent VAT returns. As a consequence, the proposal provides that any corrections to the final return and previous returns arising after the submission of the final return shall be discharged directly with the tax authorities of the Member State of consumption concerned.

(e)The records to be kept by a taxable person using the mini One Stop Shop currently include the name of the customer, where known to the taxable person. As this information must only be kept if available, is not needed to determine the Member State in which the supply is taxable, and may raise data protection issues, it is no longer included in the records to be kept by taxable persons using the One Stop Shop listed in Article 63c of the VAT Implementing Regulation. Further information on returns of goods and consignment or transaction numbers are included in Article 63c to facilitate the control of those operations.

4.

4. Other provisions


Article 14 is deleted following the deletion of Article 34 of the VAT Directive by the VAT e-commerce Directive (Article 1, point (2)).

Article 2 provides that the measures shall apply from 1 January 2021, which is the date of application of the relevant provisions of the VAT e-commerce Directive which this proposal implements. Furthermore, it provides for the possibility for taxable persons to register for the One Stop Shop as of 1 October 2020, to allow them to make use of it as of 1 January 2021.