Proposal for a Council Directive amending Directive 2006/112/EC as regards VAT rules relating to taxable persons who facilitate distance sales of imported goods and the application of the special scheme for distance sales of goods imported from third territories or third countries and special arrangements for declaration and payment of import VAT

Summary:

Legislative initiative tabled by the European Commission on 17 May 2023, introducing amendments to Directive 2006/112/EC as regards VAT rules relating to taxable persons who facilitate distance sales of imported goods and the application of the special scheme for distance sales of goods imported from third territories or third countries and special arrangements for declaration and payment of import VAT.

Further information:

Value Added Tax (VAT) is a major source of government revenue in all Member States of the European Union (EU). The revenue loss, known as the VAT Gap, delineates the issues caused by sub-optimal VAT collection and control. It also includes revenues lost to domestic VAT fraud and evasion, VAT avoidance, bankruptcies and financial insolvencies, as well as miscalculations and administrative errors. The VAT system is not only prone to fraud, but has also become increasingly complex and burdensome for businesses.

In response to the growing e-commerce activity and a fragmented regulatory framework for the collection of VAT on e-commerce supplies, a legislative package introduced a number of VAT and customs related reforms to modernise and simplify the collection of tax on e-commerce transactions. One such simplification is the Import One-Stop Shop (IOSS), which is however only available for distance sales of imported food with an intrinsic value not exceeding €150 (customs duty exemption threshold).

This draft law seeks to amend Council Directive 2006/112/EC by deleting the €150 threshold that applies to the IOSS, in line with other changes put forward under the proposed reform of the Customs Union. It aims to further reduce the compliance burden faced by traders making distance sales of imported goods by also extending the simplification known as the special arrangements and deemed supplier regime.

The proposed Regulation was adopted by the European Commission on 17 May 2023 as part of a wider legislative packages seeking to reform the EU's Customs Union.

Official

European Commission: DG Taxation and Customs Union: EU Customs Reform https://taxation-customs.ec.europa.eu/customs-4/eu-customs-reform_en

European Commission: Press Release, 17/05/2023: EU Customs Reform: A data-driven vision for a simpler, smarter and safer Customs Union https://ec.europa.eu/commission/presscorner/detail/en/ip_23_2643

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