EU lawmakers are pushing for a one-year delay to the implementation of most elements of the VAT in the digital age (VIDA) package. The VIDA package aims to enhance tax authorities’ utilization of technology and modernize VAT rules, but MEPs believe that businesses need more time to prepare for the changes. Alongside this request for a delay, MEPs are also proposing modifications to obligations placed on platforms that offer short-term accommodation. Additionally, they are endorsing alterations to VAT rules for taxable individuals who facilitate distance sales of imported goods.
One of the proposed changes is the elimination of the EUR150 threshold for the Import One Stop Shop (IOSS) and an extension of the deemed supplier rule. These changes are aimed at simplifying the process for businesses and ensuring a more efficient collection of VAT on cross-border e-commerce transactions. Furthermore, MEPs are calling for enhanced cooperation in combating VAT fraud and improvements to the VAT Information Exchange System (VIES). They suggest that the European Commission should provide national tax authorities with the necessary resources and technical guidance for implementing electronic systems.
The VIDA package, originally scheduled to be implemented on July 1, 2021, encompasses various measures aimed at modernizing VAT rules in the digital era. These measures include the extension of the Mini One Stop Shop (MOSS) to cover B2B supplies, the introduction of a One Stop Shop (OSS) for distance sales of goods, and the removal of the low-value consignment relief for imported goods. The package also seeks to enhance the cooperation and exchange of information between tax authorities to combat VAT fraud effectively.
MEPs argue that the COVID-19 pandemic has had a significant impact on businesses, causing disruptions and financial challenges. They believe that a one-year delay to the implementation of the VIDA package would allow businesses to focus on their recovery and adapt to the new VAT rules without unnecessary pressure. This delay would provide them with sufficient time to update their systems, train their staff, and ensure compliance with the new regulations.
In addition to the proposed delay, MEPs are suggesting changes to obligations imposed on platforms that offer short-term accommodation, such as Airbnb and Booking.com. The current rules require these platforms to collect and remit VAT on behalf of the hosts. MEPs recommend revising these obligations to ensure a fair and proportionate burden on platforms, taking into account their size and resources. This proposal aims to strike a balance between facilitating compliance and supporting the growth of the sharing economy.
Furthermore, MEPs are endorsing changes to VAT rules for taxable individuals who facilitate distance sales of imported goods. They propose removing the EUR150 threshold for the IOSS, which allows businesses to collect and remit VAT on cross-border sales of goods up to this value. The removal of this threshold would simplify the process for businesses and ensure the efficient collection of VAT on all imported goods. Additionally, MEPs suggest extending the deemed supplier rule to all goods and services sold through online marketplaces, regardless of their value. This extension would help prevent VAT fraud and ensure a level playing field for all businesses operating in the digital marketplace.
The fight against VAT fraud is another crucial aspect of the VIDA package. MEPs are calling for improved cooperation between tax authorities and enhancements to the VIES. They believe that by strengthening the exchange of information and improving the effectiveness of the VIES, it will be possible to detect and prevent VAT fraud more efficiently. MEPs are also urging the European Commission to provide national tax authorities with the necessary resources and technical advice to implement electronic systems effectively. This support would help ensure a smooth transition and facilitate the implementation of the VIDA package.
In conclusion, EU lawmakers are seeking a one-year delay to most elements of the VAT in the digital age package. They argue that businesses need additional time to prepare for the changes and that a delay would allow them to focus on their recovery from the COVID-19 pandemic. Alongside this delay, MEPs are proposing modifications to obligations on platforms offering short-term accommodation and changes to VAT rules for taxable individuals facilitating distance sales of imported goods. These proposals aim to simplify processes, ensure a fair burden on platforms, and enhance the fight against VAT fraud. The VIDA package represents an important step towards modernizing VAT rules in the digital era, and MEPs are committed to ensuring its effective implementation.
