On 5 December 2017, the Council adopted new rules making it easier for online businesses to comply with VAT obligations. Part of the EU's 'digital single market' strategy, the proposals are aimed at facilitating the collection of VAT when consumers buy goods and services online.
The new rules extend an existing EU-wide portal (mini 'one-stop shop') for the VAT registration of distance sales. And they establish a new portal for distance sales from third countries with a value below €150. This will reduce the costs of complying with VAT requirements for business-to-consumer transactions.
VAT will be paid in the member state of the consumer, ensuring a fairer distribution of tax revenues amongst member states.
Additionally, the texts make online platforms liable for collecting VAT on the distance sales that they facilitate. This was not foreseen in the Commission's proposals, but has become an essential provision of the package. Most goods that are imported for distance sales currently enter the EU VAT-free, resulting in unfair competition for EU businesses.