Paolo Gentiloni, European Commissioner for the Economy.POOL / OLIVIER HOSLET / EFE

Countdown to the application of the new European VAT rules: they will enter into force on July 1. The new rules will be aimed at electronic commerce and will have a double objective: to simplify procedures by reducing the administrative burden for companies and at the same time reducing the gap that exists in the Member States between the expected VAT and the amount collected. In the case of Spain, this difference is 6%, equivalent to 4,909 million, according to the latest data from the European Commission.

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The difference between the VAT expected to be collected and that actually paid by the Member States reached 140,040 million euros in 2018. This figure represents a slight decrease, of around 1,000 million euros, compared to the previous year, and confirms the reduction of the gap in recent years. The Community Executive, however, fears that the crisis caused by the pandemic has reversed this trend and estimates that in 2020 the potential loss will have reached 164,000 million euros.

“Efforts to crack down on opportunities for VAT fraud and evasion have been bearing fruit, but they also reveal that much remains to be done,” EU Economic Commissioner Paolo Gentiloni said in September last year with occasion of the publication of the data on the VAT gap.

According to these data, relative to 2018, Romania is the EU country with the largest difference between VAT expected and collected: the loss of revenue stands at 33.8%, followed by Greece (30.1%) and Lithuania ( 25.9%). The smallest deviations occurred in Sweden (0.7%), Croatia (3.5%), and Finland (3.6%). In absolute terms, the highest figures were those of Italy (35.4 billion), the United Kingdom (23.5 billion) and Germany (22 billion).

The new VAT rules will be implemented throughout the EU to ensure payment of the tax where goods are consumed or services are provided, create a uniform VAT regime for cross-border deliveries of goods and services and simplify procedures . Companies will be able to declare and pay the VAT tax required of them in the EU through the single window (import) portal; introduce a balanced playing field between EU companies and non-EU sellers.

Single window

Previously, in order to pay VAT, companies had the obligation to register in each country before being able to operate. Removing this requirement will save EU companies up to € 2.3 billion a year in compliance costs. When the new rules come into force, companies will be able to declare and pay VAT on all their intra-community sales in a single quarterly declaration working with the tax administration of their own country and in their own language, even when sales are cross-border. The new platform for businesses and taxpayers, the VAT Single Window (OSS), can be used to declare VAT due on goods and services sold online across the EU, reducing compliance costs up to 95%.

On the other hand, the Import Single Window (IOSS) aims to facilitate the collection, declaration and payment of VAT for sellers who supply goods from outside the EU to EU customers. In practice, it means that these providers and electronic interfaces can collect, report and pay VAT directly to the tax authorities of their choice, rather than the customer having to pay import VAT at the time the goods are delivered. goods. This makes it easier for companies to do business, but also protects buyers from hidden costs.

Finally, the current VAT exemption will be repealed for packages entering the EU whose value does not exceed 22 euros. This exemption meant that some sellers could fraudulently declare expensive goods, such as smartphones, at a lower price only to benefit from this exemption, thus undermining EU companies that had no alternative but to pass the full VAT rate on the same products to their customers.

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