EU VAT Changes for E-Commerce Businesses

Aleksandra Bal summarizes the key changes that go into effect January 2021.

Video Overview:

In this World Finance video, Aleksandra Bal, senior product manager of EU indirect tax reporting solutions at Vertex, addresses the two objectives of one of Europe’s largest reforms in recent years: the VAT e-commerce package.

  • The VAT e-commerce package seeks to make VAT fit the modern economy and lower the compliance burden for online businesses.
  • The VAT e-commerce package will affect sellers who provide electronic services and goods to European individuals.
  • The first major change is that the distance selling regime will disappear, making life simpler for e-retailers. In 2021, European businesses can register in just one member state and do all filings there, rather than registering across all EU member states.
  • Another major provision is the change in how VAT works in online platforms. Currently, when a seller supplies goods online, there’s only one transaction—seller to customer—and the platform acts as an intermediary. Under the new rules, there will be two transactions. The seller will sell to the platform, and the platform will resell to the customer. This means more compliance burden for online platforms. But for online sellers, life will be simpler. 
  • As with any reform, there are pros and cons for everyone involved.

World Finance + Vertex

In March 2019, tax professionals, solution experts, and our very own customers met in Munich for Vertex Exchange Europe. World Finance interviewed half a dozen delegates for an update on Europe’s tax compliance challenges and technological advancements.