Developing the One Stop Shop for cross border VAT compliance
Brussels, 13 January 2012 – Doing business in more than one Member State often means dealing with several tax administrations in different languages. Dealing with multiple VAT obligations can be very burdensome and costly for companies. The proposal adopted today is a first step towards a One Stop Shop for all electronically delivered services that will benefit businesses as from 1st January 2015. As set out in last December's Commission Communication on the future of VAT (see IP/11/1508), the One Stop Shop approach for EU trade across borders will be applied first to e-commerce, broadcasting and telecom services. In the future the Commission will seek to extend the One Stop Shop step by step to other goods and services.
Algirdas Šemeta, Commissioner for Taxation, Customs, Anti-fraud and Audit said: "The complexity of the current EU VAT system is an obstacle to doing business in the Single Market. The One Stop Shop will greatly facilitate cross border expansion of European start ups. This in turn will help to generate growth and jobs".
The recently adopted Communication on the future of VAT has stressed that a fully developed One Stop Shop (OSS) – a measure proposed in the Commission’s plan to reduce the administrative burdens − is a high priority.
The proposal today relates to aspects such as the scope of the scheme, reporting obligations, VAT returns, currency, payments, records and so on for which common rules are necessary. The implementation on 1st January 2015 of a mini One Stop Shop for the EU providers of telecommunications, broadcasting and electronic services to consumers will be a big step forward in simplifying VAT compliance rules in the EU. The One Stop Shop will allow businesses to declare and pay the VAT in the Member State where they are established rather than where their customer belongs. The One Stop Shop system that is currently limited to non-EU providers of electronic services is being extended to EU businesses and to broadcasting and telecom services. In the future the intention is to extend the One Stop Shop to even more activities, including supplies of goods. The proposal adopted today by the Commission is a first step in an extensive work programme which will lead to the timely and successful implementation of the new scheme. The Commission calls on all Member States to agree to these measures in 2012. A common approach is key to design the IT systems which will provide the necessary exchange of information between tax authorities in 27 Member States and to ensure its full implementation by 2015.
Since July 2003, a One Stop Shop system has been in place to simplify VAT obligations for non-EU suppliers of electronic services to EU consumers (see IP-04/331). The system has functioned well, allowing non-EU traders who are liable to pay VAT in the EU to choose a single place for VAT compliance. Via this single electronic portal, a single VAT declaration and payment is submitted. On the basis of the information supplied, this payment is allocated automatically to the different Member States where VAT is due.
On 1 January 2015, the VAT rules on the place of supply of services will change for companies supplying telecommunications, broadcasting or electronic services to EU customers. The VAT becomes due where the customer belongs. This makes it necessary to broaden the current scope of the existing One Stop Shop system. Currently, a scheme is already in operation for non-EU businesses supplying electronic services. The scheme will now extend to both EU and non EU businesses and - in addition to electronic services - incorporate telecommunications and broadcasting services. It will allow suppliers to use a web portal in the Member State in which they are identified to account for the VAT due in other Member States on supplies of these services to private consumers.
To ensure legal certainty, clear and binding rules are needed on the application of this new scheme. The current provisions of implementing rules to the VAT directive (Council Regulation EU/282/2011) therefore need to be amended to this effect.
For the full text of the Regulation, see:http://ec.europa.eu/taxation_customs/taxation/vat/key_documents/legislation_proposed/index_en.htm