30 November 2017
The EU’s Economic and Financial Affairs Council (ECOFIN), which is a council consisting of economic and finance ministers from all EU member states that are responsible for setting economic and taxation policies within the EU, have failed to reach an agreement on the proposed 2022 E-Commerce VAT regime reforms.
The main proposal was to shift the EU VAT regime from an origin-based system to a destination-based system for sellers that are not Certified Taxable Persons (“CTP”).
If implemented, this would mean that the taxing of cross-border sales between businesses (B2B) may no longer be zero-rated if the seller is not a CTP. Instead, the seller would be expected to charge the VAT of the destination country of the goods. Then, in a mirror image of the Mini One Stop Shop (MOSS), which is currently used for reporting and paying VAT on electronic service sales to consumers, the seller would report and pay the foreign VAT to all member states through their own EU member states’ VAT online portal.
The ECOFIN failed to agree on these proposals and postponed further discussions until December 2017, as member states (most notably Germany and Finland) raised concerns around the use of MOSS as it would pass control of VAT collection rights to fellow member states.
For a full explanation of what a CTP is and on all of the E-Commerce VAT regime reforms, please refer to our article below: