Extend the Mini One Stop Shop (MOSS) to online B2C supplies of goods and other services

Potential of action

In the EU, in principle, every supply of goods or services for consideration by a business is subject to VAT, which is typically levied at the standard rate of between 17% and 27% of the sales price depending on the Member State[1]. 38% of traders with experience of selling online cross-border and 54% of potential online cross-border sellers mention dealing with foreign taxation as a problem[2].

Currently it costs a business engaged in cross-border business to consumer sales of goods up to EUR 8000 annually in VAT compliance costs for each Member State it supplies to. For importation of goods above the VAT threshold the average cost is almost EUR 9 per transaction. Through the proposed extension of the VAT One Stop Shop, such suppliers can account for taxes through their own tax administration or for non-resident ones through one administration of choice using the national rules (excluding rates/exemptions/record keeping) in place in their 'home' Member State[3]. The 2015 Mini One Stop Shop for B2C supplies of electronic services, which is hosted by tax administrations in Member States, is an efficient system which has reduced compliance costs by 95% compared to the alternative of direct registration. This has led to annual administrative savings of EUR 40,000 per business or a total of EUR 500 million.  EUR 3 billion VAT was collected through the system in 2015 representing up to EUR 18 billion in trade.

Description of action

The complications of having to deal with many different national systems represent a real obstacle for companies trying to trade cross-border both on and offline. In 2015, the new "place of supply" rules entered into force and in parallel, an electronic registration and payment system for VAT (the Mini One Stop Shop), has been implemented to reduce the costs and administrative burdens for businesses concerned. This current Mini One Stop Shop will be extended from 2021 to cross-border B2C online sales of physical goods ordered online both within and outside the EU. Instead of having to declare and pay VAT to each individual Member State where their customers are based, businesses would be able to make a single declaration and payment in their own Member State.

The overall objective is to minimise burdens attached to cross-border e-commerce arising from different VAT regimes, provide a level playing field for EU business and ensure that VAT revenues accrue to the Member State of the consumer. It is estimated that the proposal to extend the One-Stop Shop will reduce administrative costs for business by EUR 2.3 billion and will lead to an increase in intra-EU e-commerce. The extension of the one-stop shop combined with the removal of the VAT exemption for the importation of small consignments is estimated to increase VAT revenues for Member States by EUR 7 billion annually by 2021 and improve the competitiveness of EU business.

Main responsible at the European Commission: DG TAXUD       

Target date: Q4 2016     

Status: COMPLETED, Proposal was made on 1 December 2016. It was adopted by Council on 5 December 2017 (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32017L2455). The initiative, as proposed by the Commission in the Action Plan, has been achieved. Implementation across the EU is foreseen for 1 January 2021.                     

More info (website):

http://ec.europa.eu/taxation_customs/taxation/vat/digital_single_market/index_en.htm

[1]http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52015SC0100&from=EN

[2]http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52015SC0100&from=EN

[3]http://ec.europa.eu/smart-regulation/roadmaps/docs/2016_taxud_002_iia_vat_en.pdf