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EU States Delay Approving Latest Digital VAT Reforms

by Ulrika Lomas,, Brussels
Wednesday, November 8, 2017

EU finance ministers have failed to reach a political agreement on adopting plans on reforming value-added tax rules for e-commerce.

A compromise text was presented by the Estonian presidency during a meeting of finance ministers on November 7. Although the text "received broad support from ministers," one unnamed delegation "was not yet able to lift its reservations."

The proposals form part of the EU's digital single market strategy. The intention is to extend the existing EU-wide portal (the mini "one-stop shop") and to establish a new portal for distance sales from third countries. The proposals are expected to reduce the costs of complying with VAT requirements for business-to-consumer transactions and strengthen administrative cooperation. They would make online platforms liable for collecting VAT on the distance sales that they facilitate.

The intention is for ministers to discuss the scheme again when they meet in December. The Council must unanimously agree on the package for it to be implemented. The European Parliament is expected to give its opinion soon.

Toomas Toniste, Minister of Finance for Estonia, said: "We need new rules to adapt our VAT system to the digital era. We are currently close to an agreement and hope to conclude soon."

EU Vice-President Valdis Dombrovskis commented: "We regret that ministers could not reach a political agreement on the VAT e-commerce package today. But good progress was made and hopefully the deal can be sealed at the December ECOFIN."