Since the beginning of the year, a new series of rules and regulations have come into force to unify the eCommerce in Europe. But in addition to a new set of rules in the regulation of electronic commerce, a Special Regime for the taxation of VAT has also entered into force for companies that provide telecommunications, radio and television or electronic services whose registration is voluntary.
We are going to see below what are the key points that the european online stores from now on and how it affects the eCommerce in general.
Relevant changes
IVA
From January 1, the VAT rate that must be applied to the services sold will be the one in force in the country of the European Union where the consumer resides, instead of the VAT in force in the country from which the service is provided, as has happened until now.
Electronic bill
From January 15, Euroapa e-commerce companies must issue an electronic invoice to all consumers who expressly request it at the time of purchase and those who agree to receive it, within the Electronic Invoice Boost Plan.
Data protection and Cookies Law
On the other hand, regarding the administrative requirements that govern electronic commerce, it will be necessary to be cautious in complying with regulations that refer to data protection and the use of cookies that facilitate commercial transactions (General Telecommunications Law, published on 10 May 2014 in the BOE).
How does the new European regulation on VAT affect eCommerce
According to data collected by specialists in tax regulations Taxamo, e-service merchants in are not prepared to face the important changes in the VAT regulations that come into force as of 2015.
"From Taxamo we highlight the relevance of this matter for ecommerce because every day we receive calls and answer questions from companies from all over Europe that are confused with these new rules and are not clear about what they have to do to comply with them", commented John McCarthy, CEO of Taxamo.
New EU VAT rules require merchants to identify the country in which their end customer is located by collecting two non-conflicting tests to apply the correct local VAT rate for that location. There are also other fiscal obligations in addition to the communication of the income obtained by VAT, such as the storage for ten years of the information regarding VAT transactions and the guarantee of compliance with the various VAT regimes existing in the European Union. Online product or service providers that do not comply with these new rules may be penalized in the jurisdiction of the Member State in which these tax laws have been violated.
Although these measures are aimed at preventing large multinational corporations such as Amazon or Google from diverting the taxation of all their sales in Europe through countries with a lower VAT, the change in VAT regulations in the European Union will have an impact. significant in merchants and businesses of all sizes.
It is estimated that more than 250.000 European businesses will be affected by the new rules and a considerable part of these companies will be small or medium in size, many of which currently do not have to register to pay VAT in their country of origin. It is estimated that thousands of small businesses will now have to declare VAT for the first time on any cross-border electronic sale, even on single euro transactions.
The European Commission has been working with Member States to develop audit guidelines to ensure that all companies play their part in properly identifying taxes. Furthermore, EU legislation already provides for extensive cooperation between tax administrations to assess and collect this tax.