Postponement 1: VAT eCommerce Package Postponed By 6 Months
The first postponement that has been proposed is the entry into application of the VAT e-commerce package by 6 months. Instead of these rules applying from the original date of 1 January 2021, the new launch date will be 1 July 2021. This gives Member States and businesses more time to prepare for the new VAT eCommerce rules.
Background to VAT eCommerce Package
The European Commission aims at simplifying VAT obligations for companies carrying out cross-border sales of goods or services (mainly online) to final consumers and to ensure that VAT on such supplies is paid correctly to the Member State of the customer, in line with the principle of taxation in the Member State of destination. This Regulation provides the details for the registration in the VAT One Stop Shop, including the Import One Stop Shop, and for the VAT One Stop Shop return.
Postponement 2: Deferment of Deadlines for filing and exchanging information under DAC
The following was outlined in the EU Commission’s statement:
Based on the proposed changes, Member States will have three additional months to exchange information on financial accounts of which the beneficiaries are tax residents in another Member State. Similarly, Member States will have three additional months to exchange information on certain cross-border tax planning arrangements.
Depending on the evolution of the Coronavirus pandemic, the Commission proposes the possibility to extend the deferral period once, for a maximum of three further months. The proposed tax measures only affect the deadlines for reporting obligations.
The beginning of application of DAC 6 will remain 01 July 2020 and the reportable arrangements made during the postponement period will have to be reported once the deferral has terminated. Equally, the information on financial accounts to be exchanged under DAC 2 during that period will have to be reported after the deferral has ended. The choice of different deferral periods responds to the fact that while the exchange of information under the DACs relies on an existing IT system, the e-Commerce package requires both adaptation of existing IT systems and the setting-up of new ones by Member States.
European Parliament and Council have been informed of these proposals. The EU Commission is waiting upon swift adoption from both institutions in order to provide legal certainty to stakeholders.
For more COVID-19 related VAT updates, please visit our dedicated COVID-19 news desk.