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Selling goods online is big business. For VAT purposes, in pursuance of the so-called distance selling scheme, distance sales (e-commerce supplies) are subject to VAT in the EU Member State where the transport of the goods ends, if said goods were dispatched or transported ‘by or on behalf of the supplier’. The Court of Justice of the EU recently ruled in the KrakVet Marek Batko case (no. C-276/18) on VAT and e-commerce, which centred on the question: Does the distance selling scheme also apply if the transport of the goods is set up contractually by the buyer?
Effective 1 July 2021, businesses which focus on e-commerce supplies of goods within the EU will be subject to new VAT rules
The concept of VAT fixed establishments has been discussed at the European Commission level, in ECJ cases and in court cases across EU Member States - but uncertainty remained. Businesses looked to the decision of the recent Dong Yang case (C-547/18) for clarification. Would the outcome offer businesses the opportunity to avoid discussions with tax authorities?
Aggressive cross-border transactions: the countdown is on to new reporting obligations
In less than a week’s time, new reporting rules come into effect that are designed to increase the level of transparency within the EU and detect potentially aggressive tax arrangements. Building on earlier initiatives and directives aimed at creating an environment for fair and transparent taxation, the EU has expanded the scope of its Directive on Administrative Cooperation. With the introduction of Council Directive 2018/822 of 25 May 2018, the EU creates mandatory disclosure rules for intermediaries and taxpayers with respect to potentially aggressive cross-border tax planning arrangements. This new reporting obligation is expected to play a critical role in the relationship of (tax) advisors and their clients.
Reportable cross-border arrangements (DAC6) applies to cross-border tax arrangements that meet one or more specified characteristics (hallmarks), and which concern either more than one EU country or an EU country and a non-EU country. It mandates a reporting obligation for these tax arrangements if in scope no matter whether the arrangement is justified according to national law.
The reporting does not necessarily mean that there is a tax problem or that a transaction/scheme is illegal. The purpose is to gain insight into the schemes where there may be a challenge and where the tax authorities in Europe may have an extra interest in looking into the matter.
DAC6 arrangements officially enter into force on 1 July 2020. However, the regime catches cross border arrangements entered into since 25 June 2018. Historical information, being reportable arrangements with respect to the period from 25 June 2018 to 30 June 2020, is reportable by 31 August 2020 at the latest. In view of the COVID-19 pandemic, the European Commission has submitted a proposal for a three-month extension, which defers the reporting deadline to 31 October 2020 for the reportable arrangements related to the period 1 July 2020 to 30 September 2020, and to 30 November 2020 for historical information. Depending on the evolution of COVID-19 measures, another three-month extension may be possible.
Failure to comply with DAC6 may result in sanctions under local law in EU countries and reputational risks for businesses, individuals and intermediaries.
Meet the experts
|Tanja De Decker||Androulla Soteri|
|Tax Partner||Tax Director|