eCommerce in EU: VAT charged to companies selling goods online from 2021

In recent years, in France and many European countries, eCommerce has grown considerably and is firmly anchored in the consumption habits of the population. According to the European eCommerce Report 2018 issued by the European Electronic Commerce Association and eCommerce Europe, B2C eCommerce global turnover reached 534 billion Euros in 2017, an increase of 11% compared with 2016, and with a forecast of 602 billion Euros for 2018. This is nearly double the amount in 2013, where the market represented only 307 billion Euros.

The development of online commerce soon raised questions about the laws governing trade in different European countries. Where to tax eCommerce companies, how to tax them, how high, under which tax system, and more. These are all questions that the European Union has tried to address through the adoption of various regulations and directives. In particular, the Council Directive 2006/112 /EC went into action on November 28th, 2006, and relates to remote sales of goods and certain domestic deliveries of products. This was subsequently modified by Directive (EU) 2017/2455 of December 5th, 2017.

This new directive will enter into force on January 1st, 2021, in the EU Member States. The EU aims to improve the collection of VAT on online sales in member countries and to fight against VAT fraud to ensure a fairer competition for companies. The document presenting this directive specifies the scope of this new directive, which will:

Extend the scope of the special schemes for non-established taxable persons supplying telecommunications, broadcasting or electronic services to non-taxable persons, as defined in Articles 358 to 369k of the VAT Directive (the so-called “mini One Stop Shop”) to all types of services as well as to intra-Community distance sales of goods and distance sales of products imported from third territories or third countries, turning the mini One Stop Shop into a One-Stop-Shop. The mini One Stop Shop allows suppliers of such services to use a web portal in the Member State in which they are identified to account for the VAT due in the other Member States.

Introduce special provisions applicable to taxable persons who facilitate certain supplies to non-taxable persons made by other taxable persons through the use of an electronic interface such as a marketplace, platform, portal, or similar means.
Hopefully, this directive will have the desired effect on eCommerce in Europe.

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