European Commission to implement ‘digital’ VAT reform

In the European Union the biggest challenge ahead of e-commerce businesses that deliver abroad is the different VAT systems of various countries. The European Commission (EC) started a dialogue with such companies about how to simplify the VAT system at EU level for e-commerce. Early 2016 the EC will prepare a draft regulation on digital VAT, as part of a bigger strategy to create the digital single market in the EU. The commission’s plan is to include not only products but also cross-border services, telecommunication and broadcasting in the new regulation. It will also be proposed that companies that sell their products or services abroad should only pay the VAT in their country of residence.