EC as regards provisions relating to distance sales of goods and certain domestic supplies of goods - Main contents

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dossier	COM(2018)819 - Amendment of Council Directive 2006/112/EC as regards provisions relating to distance sales of goods and certain domestic ...
source	COM(2018)819
date	11-12-2018

1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

On 5 December 2017, the Council adopted Council Directive (EU) 2017/2455 ¹ (“the VAT e-commerce Directive”) amending Directive 2006/112/EC ² (“the VAT Directive”) which, inter alia:

–Extends the scope 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') 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. 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;

–Introduces special provisions applicable to taxable persons who facilitate certain supplies to non-taxable persons 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 additional rules needed to support these amendments to the VAT Directive which apply from 1 January 2021, insofar as such support cannot be attained through implementing measures laid down in Council Implementing Regulation (EU) No 282/2011 ³ (“the VAT Implementing Regulation”). This concerns, in particular, the provisions relating to electronic interfaces facilitating supplies of goods to non-taxable persons in the EU by taxable persons not established in the EU and the special arrangements for declaration and payment of import VAT where the One Stop Shop for distance sales of goods imported from third territories or third countries is not used.

• Consistency with existing policy provisions in the policy area and with other Union policies

This proposal lays down detailed provisions required to supplement 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

The proposal is based on Article 113 of the Treaty on the Functioning of the European Union (TFEU). This article provides for the Council, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the European Economic and Social Committee, to adopt provisions for the harmonisation of Member States' rules in the area of indirect taxation.

• Subsidiarity (for non-exclusive competence)

The proposal is addressing certain issues arising from the adoption of the VAT e-commerce Directive which has to be applied by all Member States alike. The changes serve, in particular, to ensure that the provisions on electronic interfaces are 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

The proposal is consistent with the principle of proportionality i.e. it does not go beyond what is necessary to meet the objectives of the VAT e-commerce Directive and equally the smooth functioning of the single market. As with the subsidiarity test, it is not possible for Member States to address the issues without a proposal to amend the VAT Directive.

• Choice of the instrument

The proposal requires amending the VAT Directive. It lays down the specific rules necessary for the correct application of certain provisions of the VAT e-commerce Directive, where the goals pursued cannot be reached through the adoption of implementing measures as they require amending basic provisions of the VAT Directive. This concerns, in particular, provisions relating to electronic interfaces facilitating supplies of goods in the EU made by taxable persons not established in the EU and the special arrangements for declaration and payment of import VAT where the Import One Stop Shop is not used.

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

• Stakeholder consultations

The Commission undertook several consultation rounds with the 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 the business sectors concerned jointly discussed the issues arising from the implementation of the VAT e-commerce Directive.

• Impact assessment

An impact assessment was carried out for the proposal which lead to the adoption of the VAT e-commerce Directive. The current proposal only amends what is necessary for the functioning of some of the provisions of that Directive.

• Regulatory fitness and simplification

The main goal of the proposal is to expand on the provisions concerning taxable persons operating electronic interfaces such as marketplaces, platforms and portals facilitating supplies of goods in the EU by taxable persons not established in the EU. The proposed changes will further simplify the administrative burden of such taxable persons by allowing more transactions to be reported in the One Stop Shop, thus improving the VAT collection. These provisions therefore do not have any impact for micro-enterprises or SMEs established in the EU.

4. BUDGETARY IMPLICATIONS

This proposal has no budgetary implications.

5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

1. 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

Article 14a inserted in the VAT Directive by the VAT e-commerce Directive provides that where a taxable person facilitates, through the use of an electronic interface such as a marketplace, platform or portal either distance sales of goods imported from third territories or third countries in consignments of an intrinsic value not exceeding EUR 150 (Article 14a(1)) or the supply of goods within the Community by a taxable person not established there to a non-taxable person (Article 14a(2)), the taxable person who facilitates the supply shall be deemed to have received and supplied the goods himself.

This effectively splits a business to consumer supply (B2C supply) from the supplier selling goods through the use of the electronic interface to the customer into two supplies: a supply from that supplier to the electronic interface (B2B supply) and a supply from the electronic interface to the customer (B2C supply). It is therefore necessary to determine to which supply the dispatch or transport of the goods should be ascribed to properly determine their place of supply. Article 1, point (1) provides that the dispatch or transport should be ascribed to the supply from the electronic interface to the customer, as also indicated in the statement included in the Council minutes upon the adoption of the VAT e-commerce Directive.

The straightforward application of Article 14a(2) would create additional administrative burdens for the companies concerned as well as the risk of VAT revenue losses resulting from the payment of VAT by the electronic interface to the supplier selling goods through the use of the electronic interface. The following amendments proposed address these issues:

–The B2B supply from the supplier selling goods through the use of the electronic interface to the electronic interface is exempt (Article 1, point (2)) with a right for that supplier to deduct the input VAT he paid himself in respect of the purchase or import of the goods supplied (Article 1, point (3));

–According to Article 369b of the VAT Directive as amended by the VAT e-commerce Directive, the One Stop Shop can only be used to declare and pay VAT on intra-Community distance sales of goods and not for a domestic supply of goods. As suppliers selling goods through the use of an electronic interface may hold a stock of goods in different Member States from which they make domestic supplies, electronic interfaces deemed to have supplied those goods themselves would be obliged to register for VAT in all these Member States to account for VAT on these domestic supplies. This would remove the simplification of the One Stop Shop for electronic interfaces and thus result in additional obligations for them. It is therefore proposed to allow electronic interfaces to use the One Stop Shop also for domestic supplies to customers when they are deemed to supply the goods themselves under Article 14a(2) of the VAT Directive. This requires the following changes to Chapter 6 of Title XII of the VAT Directive:

–Amend the heading of the Chapter and of its Section 3 (Article 1, points (5) and (6));

–Amend the definition of the Member State of consumption (Article 1, point (7)(a));

–Extend the scope of the special scheme (Article 1, point (8));

–Amend the provision on the exclusion of a taxable person from the special scheme (Article 1, point (9));

–Allow the declaration of these domestic supplies in the One Stop Shop VAT return (Article 1, points (10) and (11)).

Finally, a last amendment is proposed in the special arrangements for declaration and payment of import VAT where the One Stop Shop is not used to declare VAT on distance sales of goods imported from third territories or third countries. According to Articles 369y to 369zb as inserted in the VAT Directive by the VAT e-commerce Directive global payment of import VAT must be made to customs by the end of the month following that of importation. This payment deadline is however not aligned to the deadline laid down for global payment of the customs debt in Article 111 of the Union Custom Code, providing for deferred payment until the middle of the month following the month of importation. With this proposal, the deadline for deferred payment under these special arrangements is aligned with that provided for in the Union Customs Code ⁸ (Article 1, point (12)).

Article 2 provides that the measures shall apply from 1 January 2021, which is the date of application of the relevant provisions of the e-commerce Directive.