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EU Defers E-Commerce VAT Package In Light Of COVID-19

Friday, May 15, 2020

The EU will postpone the entry into force of its VAT e-commerce package and will defer certain filing deadlines under the administrative cooperation directives due to the COVID-19 pandemic.

The European Commission has proposed that the VAT e-commerce package will apply from July 1, 2021, rather than January 1, 2021. This is to give member states and businesses more time to prepare for the new rules.

Under the VAT e-commerce package, new obligations will be introduced for online marketplaces and platforms and their business users and VAT exemptions will be removed for low-value consignments. The EU will also expand its mini one-stop shop (MOSS) system.

The Commission has also announced a three-month deferral in relation to obligations under the second and sixth Directives on Administrative Cooperation, which relate to financial accounts (DAC2) and tax planning schemes (DAC6).

DAC6 will be implemented from July 1, 2020, as planned. However, member states will have three additional months to exchange information on financial accounts relating to beneficiaries who are tax resident in another member state. Similarly, member states will have three additional months to exchange information on certain cross-border tax planning arrangements.

The Commission stated: "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 July 1, 2020, and the reportable arrangements made during the postponement period will have to be reported by the time the deferral has terminated. Equally, the information on financial accounts to be exchanged under DAC 2 during that period will have to be reported by the time the deferral has ended."