Scope:

Mini One Stop Shop (2008/8/EC): Evaluation of the implementation of the 2015 changes to the place of supply rules and the accompanying simplification measure, the Mini One Stop Shop (2008/8/EC), which is applied since 1 January 2015.

Evaluation findings:

The evaluation aimed at checking whether the Mini One Stop Shop meets its primary objective of simplifying the declaration and payment of value added tax for Business to Consumer supplies of telecommunications, broadcastings and electronically supplied services under the new place of supply rules.

The new place of supply rules for intra-EU supplies of telecommunications, broadcasting and electronically supplied services are an important step in ensuring the destination principle of VAT which is the agreed position of the Commission and Member States. However, it is recognised that the destination principle also makes life more difficult and costly for businesses that are required to account for the VAT due to the Member States of their consumers, and therefore simplification measures are needed.

Overall, the findings of the evaluation show that the new rules have been implemented effectively. In particular, the business community has been very satisfied with the introduction of the 2015 changes. Business has recognised the efforts taken to communicate these changes and the issuance of comprehensive guidance material. Business has also recognised the benefits of bringing together business and Member States prior to the introduction of the changes to ensure that these were workable.

The introduction of the Mini One Stop Shop is seen by business and the majority of Member States as an essential system for the collection of taxes and making compliance as easy as possible. The timely and relatively error-free introduction of 28 individual but intra-connected IT portals now used by approximately 14 000 businesses is a significant achievement.

It should also be recognised that such a system whereby Member States are collecting substantial tax revenues on behalf of each other is not only a key milestone for the EU VAT system but also for the single market.

There are, however, lessons to be learned from the 2015 changes, notably regarding the lack of a cross-border threshold as well as the rules for the identification of the location of customers which have caused difficulties for micro-businesses and start-ups. These issues were addressed in the 2017 adopted changes to the VAT Directive without causing distortions in the single market. Another key consideration, driven by the spirit of the Digital Single Market strategy is that doing business cross-border should be as similar as possible as doing business within the/your own Member State.

On 1 December 2016, the Commission proposed to extend the Mini One Stop shop to all cross-border supplies of services to end consumers, intra-EU distance sales of goods and to distance sales of imported low value goods (i.e. not exceeding €150). This proposal considers both the positives and the learning points from the 2015 changes. The need to have clear rules and robust IT specifications together with ongoing support from the Commission services is essential. It is also critical that any changes are communicated to those businesses who will be affected, whether in the EU or in third countries. In this respect, particular attention needs to be taken on SMEs with both the Commission and the Member States reaching out to such businesses. In addition, it is essential that Member States introduce a cross-border e-commerce compliance strategy to ensure that any abuses are identified and addressed, and therefore businesses will face a level playing field. This proposal has been further developed and complemented by the introduction of a so-called marketplace liability and implementing rules.

Estimated savings and benefits

The Mini One Stop Shop (MOSS) has been very successful. Overall, the VAT revenues collected under MOSS (both the Union scheme and non-Union scheme) shows constant growth from EUR 3 billion of VAT collected in 2015 to EUR 6.50 billion of VAT collected in 2020. In 2020, the VAT collected increased by more than 17% compared to 2019 figures Moreover, this mechanism has saved business in one year EUR 500 million or EUR 40 000 per business (95% reduction compared to the alternative of direct registration), and thus contributed to reducing unnecessary burdens on business.

Which objective(s) does the Commission pursue?

The Commission had presented on 1 December 2016 a proposal to modernise the Mini One Stop Shop applicable to telecommunications, broadcasting and electronically supplied services and to extend its scope as of 2021 to cover distance sales of goods and all cross-border services supplied to consumers in the EU. This proposal aims to modernise VAT for cross-border Business to Consumer E-Commerce and has been complemented by Council Directive (EU) 2019/1995 that introduced a VAT liability for marketplaces that facilitate certain supplies of goods.

The initiative is simplifying VAT rules and break down VAT barriers for cross border trade and make it easier for businesses to register and account for VAT in respect of cross-border Business to Consumer supplies of goods and services. It is expected that small start-up e-commerce businesses will benefit most.

This initiative was recommended by the Commission expert group on taxation of the digital economy. It will facilitate the Digital Single Market and provide a level playing field for business.

The VAT e-Commerce package aims at:

• extending the single One Stop Shop mechanism to cross-border (intra-EU and third country) online sales of tangible goods to private consumers,

• introduce a common EU-wide simplification measure (VAT threshold) to help small start-up e-commerce businesses,

• allow for home country controls including a single audit of cross-border businesses for VAT purposes.

• remove the import VAT exemption on importation of low value consignments from suppliers in third countries, together with the introduction of simplified collection measures.

It has been built on the ex-post assessment of the current Mini One Stop Shop.

Estimated savings and benefits

The proposal is expected to reduce administrative burdens for business by EUR 2.3 billion annually. It should also be stressed that it is estimated that 430 000 businesses will benefit from the new microbusiness threshold.

Outcome of Legislative Procedure

The VAT e-commerce package was adopted on 5 December 2017. Most parts of the proposal have been adopted by Council. The proposal on record keeping obligation was however not accepted and the obligation remains at 10 years. The Council also introduced special provisions to make traders (e.g. marketplaces) deemed suppliers, when they operate an electronic interface that facilitates:

• a supply of goods by non-EU established suppliers to consumers within the EU or
• a distance sale of imported goods with a value not exceeding €150

Furthermore, reporting obligations for these marketplaces facilitating supplies to non taxable persons in the EU, other then those for which they are treated as deemed supplier have been introduced.

Outcome of Legislative Procedure

The VAT e-commerce package was adopted on 5 December 2017. Most parts of the proposal have been adopted by Council. The proposal on record keeping obligation was however not accepted and the obligation remains at 10 years. The Council also introduced special provisions to make traders (e.g. marketplaces) deemed suppliers, when they operate an electronic interface that facilitates:

• a supply of goods by non-EU established suppliers to consumers within the EU or

• a distance sale of imported goods with a value not exceeding €150

Furthermore, reporting obligations for these marketplaces facilitating supplies to non taxable persons in the EU, other then those for which they are treated as deemed supplier have been introduced.

Entry into application

The VAT e-commerce package came into effect on 1 July 2021 and introduced a number of changes to the Value-Added Tax (VAT) rules governing the taxation of cross-border business-to-consumer (B2C) e-commerce activity in Europe. Under the new rules, the VAT exemption for the importation of small value consignments not exceeding EUR 22 was abolished. As a result, VAT is now due on all commercial goods imported into Europe from a third country or third territory, irrespective of their value.

The VAT e-commerce package also removed the previous annual thresholds for intra-Community distance sales of goods (EUR 35,000 or EUR 100,000 for a limited number of Member States). Since 1 July, the previous thresholds have been replaced by a new EU-wide threshold. This is an annual threshold of EUR 10,000, below which supplies of Telecommunications, Broadcasting and Electronic (TBE) services and intra-Community distance sales of goods may remain subject to VAT in the Member State where the taxable person supplying those TBE services is established, or where those goods are located at the time when their dispatch or transport begins.

The implementation of the VAT e-commerce package also resulted in the extension of the VAT Mini One Stop Shop (MOSS) to a One Stop Shop (OSS). It introduced two new simplification measures, namely, the Import One Stop Shop (IOSS) and Special Arrangements. These measures aim to simplify the declaration and payment of VAT due on distance sales of low value goods imported into the EU.

In addition, the VAT e-commerce package also provided for the deemed supplier liability of marketplaces and platforms, in cases where they facilitate distance sales of goods imported into the EU with an intrinsic value not exceeding EUR 150 and where they facilitate intra-EU cross border supplies when the supplier is not established in the EU. This new ‘deeming’ provision is significant as it mitigates the risk of non-payment of VAT. Individual sellers on marketplaces will not have to register for VAT, as the platform will be responsible for paying the VAT due on sales from its platform. This particular reform bolsters compliance as it streamlines the VAT obligations of thousands of underlying sellers by deeming the heretofore non-accountable marketplace as the taxable person liable to declare and pay the VAT due on those supplies.

The launch of the VAT e-commerce package went smoothly without major operational problems. A couple of Member States needed to implement some workaround solutions with the help of the Commission services.