As you will remember, the EU implemented the EU Ecommerce VAT Package earlier this year. The package represented the biggest reform of Ecommerce VAT rules in a generation. However, many European ecommerce businesses believe that the rules need to be tweaked, especially in regards to the storage of goods. The calls for further reform have come from Ecommerce Europe and EuroCommerce, the two biggest branch organizations in Europe. So today we’re going to take a look at what they’re proposing and assess whether the proposed changes would benefit or hinder ecommerce sellers.
What Are The Current EU Ecommerce VAT Rules?
Earlier this year, ecommerce sellers saw the introduction of the One-Stop-Shop (OSS). From the 1st July 2021, rather than registering for VAT in every individual country in which they make sales, ecommerce sellers have been able to register for the OSS which allows them to submit a single VAT return quarterly, listing all pan-EU sales.
The service is open to sellers all over the world. To use the service, you simply have to be registered in at least one EU state. This makes a lot of sense and was originally met with a very warm reception from ecommerce sellers across the globe. So why are the European ecommerce organizations now voicing their discontent with the rules?
The European Ecommerce Organizations Believe That These Rules Should Be Expanded To Include Storage
The main reservation that the European ecommerce organizations have is that these rules do not include the storage of goods in multiple countries. As it stands, sellers need to register for VAT in every European country in which they hold goods. This means that businesses that offer fulfilment in multiple countries across Europe are not really benefitting from the OSS. It has been expected that this is costing these ecommerce providers an extra €8,000 per year.
Of course, this is also taking up a lot of time for sellers in the form of administrative and compliance costs. Ecommerce Europe and EuroCommerce believe that by expanding the current rules to include storage, the EU could save sole traders and SMEs valuable time and money in compliance costs. They also believe this will allow sellers to be more competitive in the current globalized ecommerce market. We find it hard to disagree with them.
Other Changes That We Might See
Those pushing for these reforms are hoping that they will be implemented before 2023. This is because 2023 will see the introduction of a new piece of EU legislation called the Digital Markets Act (DMA). This legislation is intended to curb the power of the digital giants such as Facebook and Google to allow for fairer competition in Europe.
However, ecommerce providers are already taking issue with this legislation. The DMA will be determining which companies are considered to be the biggest ecommerce players by monitoring the amount active end users each site receives. However, European ecommerce providers are already complaining that this may mean that more smaller providers will be targeted by the Act than intended, as they argue that active end users do not actually equal sales. They would rather the EU monitor conversions.
If You Are An Ecommerce Seller, We Can Provide You With Solutions
This an exciting time to be an ecommerce seller, but at the same time these constant rule changes can be distressing and confusing. Luckily, we are here to support you. Whether it is expanding your business to another country or you just need supply chain support, we at J&P Accountants have been supporting ecommerce sellers for years and can offer you a range of services.
If you are a business who participates in cross border ecommerce, we would be more than happy to help you register for VAT, file your VAT returns, and help you comply with VAT in case your account faces any issues. At J&P, helping your business is our passion, and we understand that companies across the UK are at risk now more than ever. We are here to support you through the Coronavirus crisis and the busy festive period, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to firstname.lastname@example.org.