New rules for levying value added tax in e-commerce come into force in the European Union. They are designed to stimulate competition between European businesses and companies that operate outside the EU and therefore do not pay VAT there.
On Thursday, new rules for levying value added tax in e-commerce come into force in the European Union. They have been prepared, but not introduced, for 28 years. During this time, the market has changed a lot. Now the main goal is to stimulate competition of European businesses with companies that operate outside the EU and therefore do not pay such taxes there. The increase in VAT promises additional revenues to the European treasury in the amount of about 7 billion euros per year.
The general administrator of Belgian customs, Christian Vanderwaren, said that buyers will have to participate in the implementation of the new rule:
“The consumer will have to check if VAT has been added to the original price of the product. If not, you will also have to pay transport costs and customs duties. After that, you will need to find out the size of the new amount for the purchase. The additional cost in Belgium will be approximately 30% of the original.”
For companies, e-commerce is becoming more complex. First, the value added tax will be levied on goods cheaper than 22 euros, from which they were previously exempted. Secondly, companies from outside the European Union issuing invoices for more than 10 thousand euros will have to register on a single website for the entire EU on the Internet.
Belgium’s chief customs officer continues: “The change will be that non-European companies will be able to register at one European point. It’s called One Stop Shop. If the company does not choose this system, it will have to register in all EU member states and complete all customs formalities.”
This will have economic implications not only for EU firms and their partners. Antonio Gigllotti, director of financial consultancy at Fiscal focus, believes that the VAT reform could have an impact on international trade in general.
“China is very dissatisfied with this operation. Risks increase for him, it will be more difficult for him to open a business in Europe. From July 1, we will see what will happen next and what countermeasures countries such as China will take.”
Brussels hopes the reform will make VAT evasion impossible. It is expected that it will be easier for companies to declare their goods and operations. It will be more difficult for buyers who, when buying a product on the Internet, will have to take into account all costs in its final price, if this tax is not included in it.