At the last Eurogroup meeting in Brussels in May, the European Commission decided to postpone VAT control in e-commerce six months more than the scheduled date.
In this way, the VAT control of electronic commerce will enter into force from July 2021,and not in January 2021, as originally envisaged.
A measure that was undoubtedly taken because of the economic difficulties that both companies and the Member States of the European Union are experiencing.
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Vat control of e-commerce, postponed until July 2021
The regulations that establish the control of VAT on electronic commerce require the implementation of PROCEDURES for the management and control of VAT in an online store by companies and Member States. An implementation that was scheduled for January 1, 2021, and which, as we say, has been postponed for six months.
With these CHANGES in VAT in Spain and in the rest of the EU Member States, there will be more time to prepare for the implementation of the new VAT regulations for electronic commerce,since it was very difficult to arrive on time to the date initially planned.
This directive on electronic commerce sets at 10,000 euros the threshold by which it will be taxed in the country of destination. A very significant difference, if we take into account that until now the threshold in Spain was 35,000 euros according to the taxation of electronic commerce. In addition, the system of identification of employers is also expanded so that they do not have to identify or register in each State of consumption.
Thus, from July 2021, e-commerce platforms will be obliged to collect and enter VAT on electronic products in Spain that they have sold. A measure whose main objective is to prevent fraud that had been committed in the importation of goods made to European consumers, as well as to improve competition between businesses within the European Union and foreign countries that until now did not charge VAT.
Deadlines for submitting and exchanging information under DAC6 are deferred
On the other hand, at this same meeting, the European Commission proposed deferring deadlines for submitting and exchanging information under DAC6 (Community rule establishing the obligation on the part of tax intermediaries to declare transactions that may be regarded as aggressive tax planning, and which occur at the international level), and proposes the following:
- Delay the start date of the period for communicating the cross-border mechanisms of Annex IV to the DAC6 from 1 July 2020 to 1 October 2020. In the case of marketable mechanisms, the first periodic report by intermediaries will take place on 31 January 2021.
- Delay the date of the first exchange of information by Member States on the cross-border mechanisms of Annex IV to dac6 from 31 October 2020 to 31 January 2021.
- Delay the date of submission of cross-border mechanisms for the transitional period from 31 August 2020 to 30 November 2020.
How does VAT work in an online store?
In recent years, e-commerce has gained great importance in the sector of the economy,as it has experienced spectacular growth.
And, within electronic commerce, it is necessary to differentiate between operations that are carried out entirely by electronic means,including the reception of products purchased by the customer, and those that are purchased through the Internet, but a physical product is received.
In the first case, it would be services provided electronically,such as the download of a computer program, a video game or an ebook, while in the second, it would consist of the purchase of a physical product through the Internet,which is received at home.
That said, VAT on an online sale abroad is taxed in the destination country,which means that if a Spanish online store sells a product to a French customer, it will be in France where the tax is applied and entered.
In short, the entry into force of the VAT control mechanism for electronic commerce in the European Union – for the time being – has been delayed by six months, until 1 July 2021.