20 December 2017

Businesses selling goods online stand to benefit from changes to EU rules on VAT – although by the time they are fully implemented, the UK will have left the Union.

An agreement reached by the Member States will make it easier for consumers and businesses – especially start-ups and SMEs – to buy and sell goods across borders via the internet.

“Companies selling abroad online will deal with VAT in the same way as they do for sales in their own countries,” Andrus Ansip, Commission Vice-President for the Digital Single Market explained.

The new rules will, however, be introduced progressively and will not fully enter into force until 2021.

By 1 January 2019, VAT rules for start-ups, micro-businesses and SMEs selling goods to consumers online in other EU Member States will be simplified.

VAT on cross-border sales under €10,000 a year will be handled according to the rules of the home country of the smallest businesses. That will, the Commission points out, help some 430,000 businesses across the EU.

For SMEs, procedures will be simplified for cross-border sales of up to €100,000 annually.

The new legislation will also introduce an online portal which will allow companies that sell goods to their customers online to deal with their VAT obligations in the EU more easily.

Designed to be easy to use, the portal will enable businesses to work in their own language and will negate the need for them to register for VAT in every EU Member State into which they want to sell.

“Brick by brick and piece by piece, a new VAT system is being built that is fit for purpose and within which internet companies operating across borders can thrive,” Commissioner Moscovici claimed.

He added that the changes will also ensure that non-EU businesses do not get preferential treatment when selling to EU consumers.