globaltaxnews.ey.comSign up for tax alert emailsPrintDownload

17 December 2018

EU VAT: New details on rules for e-commerce including new role for online marketplaces and Payment Service Providers in fight against tax fraud

Executive summary

On 11 December 2018, the European Commission announced new measures aimed at making online marketplaces play their part in the fight against tax fraud in the European Union (EU) and at easing administrative burdens for businesses selling goods online.1

The new measures form part of the EU’s broader agenda to tackle Value Added Tax (VAT) fraud and to improve VAT collection on internet sales. They introduce building blocks for a new VAT system for businesses that sell goods online once the agreed framework comes into force in 2021 (One-Stop Shop). They also introduce controls on large online marketplaces making them responsible for ensuring that VAT is collected on sales of goods by non-EU companies to EU consumers (B2C sales) that take place on their platforms.

Detailed discussion

Ensuring VAT is paid

From 2021, large online marketplaces will become responsible for ensuring that VAT is collected on the sales of goods by non-EU companies to EU consumers taking place on their platforms. The proposals clarify the situations in which online platforms are considered to have facilitated a sale between users and detail the records they must keep on sales made via their interface. Since online marketplaces will be liable for any ”missing VAT,” authorities will be able to claim the tax due when sellers from outside the EU have not complied with the rules.

The proposed implementing rules will now be sent to Member States in the Council for agreement and to the European Parliament for consultation. The Commission calls for a quick agreement in 2019 so that businesses can look forward to a smooth transition to the broader VAT system for e-commerce in 2021.

Further EU information

The measures follow up on the Commission’s proposals for a deep reform of the EU VAT system presented in October 2017, and the VAT Action Plan towards a single EU VAT area presented in April 2016. Further information has been published by the EU including:

  • A proposal for a Council Implementing Regulation, amending Implementing Regulation (EU) No 282/2011 as regards supplies of goods or services facilitated by electronic interfaces and the special schemes for taxable persons supplying services to non-taxable persons, making distance sales of goods and certain domestic supplies of goods, available here
  • A proposal for a Council Implementing Directive, amending Council Directive 2006/112/EC as regards provisions relating to distance sales of goods and certain domestic supplies of goods, available here
  • Information on VAT and e-commerce published by the EU Commission DG TAXUD including legal texts
  • In the EU Digital Single Market strategy

Payment Service Providers

The Commission has also reported that a proposal linked to the fight against VAT fraud has been presented with the aim of helping to establish improved cooperation between tax authorities and Payment Service Providers such as credit card and direct debit providers.

More than 90% of European customers’ online purchases involve a payment intermediary. The EU believes that the data held by these companies can offer EU tax administrations a useful tool to control the VAT obligations arising from cross-border sales of goods and services.

The proposals establish quarterly information-sharing obligations for providers, which will allow Member State anti-fraud specialists (the ”Eurofisc” network) to exchange and analyze certain payment data received from the providers on cross-border sales. In turn, both EU and non-EU online sellers will be identifiable when they do not comply with VAT obligations. The Commission suggests that similar provisions in place in some Member States and other countries have already shown how such cooperation can provide assistance in tackling fraud in the e-commerce sector.

The measures, developed following discussions with industry leaders and Member State tax authorities, will now be submitted to Member States in the Council for agreement and to the European Parliament for consultation.

Further information on the Commission’s work to fight VAT fraud and improve VAT revenue collection in Member States, including:

  • Proposal for a Council Regulation amending Regulation (EU) No 904/2010 as regards measures to strengthen administrative cooperation in order to combat VAT fraud
  • Proposal for a Council Directive amending Directive 2006/112/EC as regards introducing certain requirements for payment service providers; and
  • Impact Assessment and executive summary

is available here.

Endnote

1. VAT: New details on rules for e-commerce presented, including a new role for online marketplaces in the fight against tax fraud, EU Commission Press release date 11 December 2018 available here.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Belastingadviseurs LLP, Amsterdam
  • Gijsbert Bulk, Global Director – Indirect Tax | gijsbert.bulk@nl.ey.com
Ernst & Young LLP (United Kingdom), London
  • Kevin MacAuley, EMEIA | kmacauley@uk.ey.com

ATTACHMENT

Document ID: 2018-6526

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2025, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more