In a move designed to simplify online trade, the EU will alter VAT rules on goods and services traded between countries in the financial bloc, according to a proposition announced on Thursday.
Other steps to be taken as part of the EU’s “digital single market” plan are to limit so called geo-blocking which makes it more difficult for consumers to purchase goods and have them delivered from a foreign country, offer added layers of protection for online shoppers, and make package delivery cheaper.
European commission representatives have been lauding the latest strategy as “the final part of the puzzle” on continental e-commerce trade, and say the VAT component of the plans are the most crucial as a tax break will give seed companies a better chance to grow and become profitable as soon as possible.
Small companies currently pay thousands of pounds registering at each individual EU country to comply with their own VAT regulations. Tearing down that particular barrier would be a huge achievement, said the commission.
“We would like to see an extension of the kinds of tax provisions that are given to video content providers and mobile phone apps,” said an EU spokesperson yesterday. “All they need to do is produce their quarterly tax returns and they get to trade across all member states. This should be the way for those selling tangible products online too.”
A recent study by Japanese-based investment firm CITIC Tokyo International showed that businesses stand to make an administrative financial saving of up to 90 percent if trade bloc VAT is standardized, which could result in overall EU savings of over 2 billion euros a year.
The commission also wants to clamp down on VAT fraud and will enable several pieces of legislation that will stop online sellers giving artificially low numbers for their VAT items.
There will also be a drive to standardize VAT on books and magazines, whether they are digital or printed. Digital products, the commission says, should be given the same tax breaks as their printed equivalents.
