Neena Gill has urged the European Commission to address concerns about new EU rules on VAT for digital services, books, eBooks and papers.
Under the new regulation, VAT on digital products sold in the EU will be chargeable in the place of purchase rather than the place of supply. These new rules - introduced to stop big corporations diverting sales through low-VAT countries - are already having significant impacts on smaller companies and sole traders. While a VAT Mini One-Stop Shop (VAT MOSS) has been introduced in an attempt to help these small businesses, many are finding the system impossible to use and the rules impossible to comply with.
The Digital Single Market Strategy by the European Commission is welcomed by most MEPs. As part of its 16 initiatives, the Commission aims to reduce VAT-related obstacles when selling across borders and this will be a welcome change to businesses and consumers alike.
However, the new place of supply VAT rules introduced from January this year need to be re-assessed and MEPs are calling on the Commission to introduce an EU-wide VAT threshold for start-ups and small businesses selling digital services across borders as a matter of urgency
Neena Gill, Labour MEP for the West Midlands and Member of the European Parliament economic and monetary affairs committee, said:
Today, an EU business wishing to make cross-border sales faces a VAT compliance cost of at least €5,000 annually for each targeted country. On top of this, EU businesses face significant distortions from VAT free goods supplied by non-EU business. These distortions cost EU business turnover of up to €4.5 billion annually.
These inconsistencies need to be tackled ASAP in an appropriate way. I addressed Commissioner Ansip in the Parliament on Monday welcoming the proposal to introduce legislation in 2016 for a common EU-wide simplification measure (VAT threshold) to help small start-up e-commerce businesses and to remove the VAT exemption for the importation of small consignments from suppliers in third countries .We are moving in the right direction, but I asked him to be more specific about thresholds and timing.
I have had a number of businesses in the West Midlands contact me - from people who sell knitting patterns as PDFs to digital start-ups - they fear these changes could put them out of businesses - they are worried about their livelihoods.
I, together with the 264,000 early-stage businesses in the UK alone, look forward to clear and convincing answers from the Commission on these questions