#VATMOSS relief is coming…possibly…in 2017.

Important VATMOSS update
On 1 December 2016 the European Commission announced a package of proposed reforms to the VATMOSS scheme. Please read this post for the latest updates, as some of the proposed changes may affect the situation described in the post below.

The European Commission held a press conference this morning on plans to modernise VAT across the EU. The discussion touched on developments concerning #VATMOSS.

The details, such as they are, were laid out in their Action Plan on VAT. The plan, in true EU style, has four pillars, and the simplification of VAT is one of them.

In the press conference, Pierre Moscovici, the Member of the EC in charge of Economic and Financial Affairs, Taxation and Customs, had a little rant about the Panama Papers. That thought will have crossed many of our minds this week: while the self-employed professionals behind team VATMOSS has been fighting since 2014 for fairer treatment for digital creators on four-figure incomes, even having to crowdfund to pay for the airfare to get to the proverbial table, people on eight, nine, and ten figure incomes have had the tax system falling at their feet. Enough is indeed enough: for everyone. Shaking down kitchen table businesses for literally 5 cents is every bit as obscene as looking the other way at offshore trickery.

For VATMOSS purposes, the most important development was summarized in the EC’s press release:

Support for e-commerce and SMEs

The current VAT system for cross-border e-commerce is complex and costly for Member States and businesses alike. EU businesses are at a competitive disadvantage because certain non-EU traders can import VAT-free goods to the EU. The complexity of the system also makes it difficult for Member States to ensure compliance. The Commission will come forward by the end of 2016 with a legislative proposal to modernise and simplify VAT for cross-border e-commerce as part of the Digital Single Market strategy. This will include a proposal to ensure that e-publications can benefit from the same reduced rates as physical publications. As a second step, we will present in 2017 a VAT simplification package designed to support the growth of SMEs and to make it easier for them to trade across borders.

Elsewhere they note “While it is too early to say which elements this package will include, the proposal will aim to reduce administrative burdens and to contribute to a favourable environment to the growth and cross-border EU trade of SMEs.”

In the meantime, the EC is pressing ahead with plans to expand the MOSS system:

The Commission will, as part of its Digital Single Market strategy, present a legislative proposal by the end of 2016 to modernise and simplify VAT for cross-border e-commerce by:

  • Extending the current One Stop Shop concept to all cross-border e-commerce, including distance sales,
  • Introducing common EU-wide simplifications measures to help small start-up e-commerce businesses…

In the press conference, no journalists asked any questions about MOSS or SMEs. The Panama Papers dominated the discussion.

So the plan is out in the public, but does it provide the depth and assistance that impacted SMEs and microbusinesses were expecting? It does not. What’s more, we’ve actually heard this all before. Andrus Ansip, European Commission vice president for the digital single market, promised to launch a proposal for an EU-wide VAT threshold on business-to-consumer (B2C) e-services “as soon as possible”. That was on 19 May 2015 – almost a year ago. Nothing has happened and nothing has changed.

It’s also worth remembering that the proposed dates, “by the end of 2016” and “in 2017”, don’t necessarily mean that any changes will happen then. We have to assume that these are the dates when legislative proposals will go into the system. Real relief might have to wait several years beyond that.

I was also disappointed to see that the summary report of the consultation into cross-border VAT administrative burdens has still not been made available. That consultation, which many of us contributed to, closed on 18 December 2015. Consultations which have closed after that have already resulted in published summary reports. I would like to believe that the feedback from the December consultation has informed the VAT Action Plan, but how would we know? None of the data is available.

In fact, the only thing we really learned today is that the EC is finally acknowledging the impact VATMOSS has had on SMEs. We should be very grateful for that. But as we say in Glasgow, all this talking is only bravado.

About the author
Heather Burns is a digital law specialist in Glasgow, Scotland. She researches, writes, publishes, consults, and speaks extensively on internet laws and policies which affect the crafts of web design and development. She has been designing and developing web sites since 1997 and has been a professional web site designer since 2007. She holds a postgraduate certification in internet law and policy from the University of Strathclyde. Learn about hiring Heather to write, speak, or consult.