On 6 May the EU Commission announced its strategy for Digital Single Market. The aim is to further simplify and harmonize the applicable VAT and legislative rules to e-biz and e-commerce (in particular re telecommunication and copyrights) as well as to reduce the administrative burden companies are facing in this field.
The ultimate goal is to remove the barriers which currently hinder EU based companies to grow and to be (more) competitive with the world’s Internet giants. The strategy also wants to help European customers to shop on-line form other EU countries as easy and simple as it their home countries. The VAT related initiatives of the strategy focuses on:
- “extending the single electronic registration and payment mechanism to intra-EU and third country on-line sales of goods to private consumers;
- introducing a common EU-wide simplification measure (VAT threshold) to help small start-up e-commerce businesses;
- allowing for home country controls including a single audit of cross border businesses for VAT purposes and;
- removing the VAT exemption for the importation of small consignments from suppliers in third countries.”
(source EU Taxation News – 6 May 2015)
However, there is a long way to go for the single digital market to become reality. The EU Commission must first come up with legislative proposals. According to the roadmap VAT related changes will proposed as early as 2016, but these are then yet to be agreed (unanimously) by the 28 Member States and passed by the European Parliament.
Critics point out that such protective EU measures against the main (US) Internet giants, some of which are already under anti-trust and data protections probes in the EU, may reduce the innovation and investment these companies make in the EU.