navigating the eu vat roadmap from 2020 to 2025 · 2020-07-20 · navigating the eu vat roadmap...

Navigating the EU VAT roadmap from 2020 to 2025Global Indirect Tax services webcast

—2 April 2020

2© 2020 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. 2© 2020 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Today’s presenters

David DuffyPartner and Chair, KPMG Indirect Tax Policy Group

KPMG in IrelandM: +353 17 00 41 52E: [email protected]

Andy van EsdonkSenior Tax Manager and GITS Leader

KPMG Meijburg & CoM: +31 88 909 15 96E: [email protected]

mailto:[email protected]


3© 2020 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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4© 2020 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. 4© 2019 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Topics for discussion

1 Starting Point: EU VAT action plan (2016)

2 Stop-off: VAT e-commerce package (2021)

3 Destination: Single EU VAT area (2020–2025)

4 Q&A

Agenda


COVID-19 tax developmentsKPMG is maintaining a webpage which monitors tax developments in relation to the COVID-19 virus per country and/or territory. The webpage can be found here.

https://home.kpmg/us/en/home/insights/2020/04/taxnewsflash-coronavirus-covid-19-developments.html


The roadmap of EU VAT changes

VAT Action Plan (Apr 16)

Proposals for Definitive VAT regime(Oct 17) and new rules on administrative cooperation between tax administrations (Nov 17). E-commerce proposal adopted (Dec 2017)

Jan 2020Quick Fixes take effect

Jan 2021VAT e-commercemeasures for B2C supplies of goods take effect

2016 2017 Jan 2018

Feb 2020Proposals agreed on VAT scheme for

SMEs and VAT reporting for PsPs

We are here

Proposals for simplified rules for SMEs and VAT rates

Proposed technical amendments for a definitive VAT regime

May 2018

Proposals adopted on:— e-publications— Cross-border administration— Quick Fixes

Oct 2018

Jan 2019B2C e-commerce simplifications

for services take effectJan 2024VAT Reporting for PSPs takes effect

Destination = Single VAT Area

Jul 2022Definitive VAT regime proposed to take effect but not yet agreed and therefore current timeline is unlikely

Jan 2025VAT Simplification for SMEs takes effect

2016action plan


KPMG in Ireland


VAT action plan: Key pillarsAction plan on VAT

Recent and ongoing policy initiatives

Removing VAT obstacles to e-commerce in the single market

+

SMEs VAT package

Urgent measures to tackle the VAT gap

Improving cooperation within the EU and with non-EU

countries and/or territories

Towards more efficient tax administrations

Improving voluntary compliance

Tax collection

Towards a robust single European VAT area

Definitive VAT regime for cross-border trade

Towards a modernized VAT rates policy

More freedom for Member States on rate policies

Source: https://ec.europa.eu/taxation_customs/business/vat/action-plan-vat_en

https://ec.europa.eu/taxation_customs/business/vat/action-plan-vat_en


KPMG Meijburg & Co

2021e-commerce


The problem

Explosion of internet and B2C trade in goods cross

border

Massive under eporting of tax deliberate and unintentional)

Explosion of SME’s trading

or offering services via

marketplaces

Marketplaces and

facilitators —Agent v

Principal (“it’s not my

problem” sentiment)

r(

Outdated or quick fix

legislation notkeeping paceand creating disparities globally

Supplier reputation


The three big changes

1 B2C sales of goods within the EU

2 B2C sales of goods from non-EU

3 B2C sales of goods through platforms from non-EU and within the EU


The numbers

€550Btotal online sales in EU per year

€96Bwhich is cross border

€7Bnew EU VAT revenues from 2021

€2.3Bdrop in VAT compliance costs

430Kbusinesses with better access

95%less administrative burden

Source: https://ec.europa.eu/taxation_customs/sites/taxation/files/vat-e-commerce-factsheet.pdf

B2C sales of goods within the EU


Current: distance sales thresholds (EUR 35K–EUR 100K)

— Charge home country and/or territory VAT if below threshold.

— Charge customer country and/or territory VAT if above threshold or if opted.

— VAT registration and VAT returns required in customer country and/or territory if above threshold or if opted.

B2Ccustomers

B2Ccustomers

e-commerceBV

EUR 50K (< EUR 100K threshold)+ NL VAT (VAT of home country and/or territory)

EUR 50K (> EUR 35K threshold)+ FR VAT (VAT of customer country and/or territory)


Future: no distance sales thresholds anymore, but OSS

— Charge customer country and/or territory VAT.

— Remit in home country and/or territory via OSS.

— No local VAT registrations nor local VAT returns, unless (…).

— Threshold for SME’s (EUR 10K).

— Extension of OSS for B2C services.

B2Ccustomers

B2Ccustomers

EUR 50K (no threshold)+ GER VAT (VAT of customer country and/or territory)

EUR 50K (no threshold)+ FR VAT (VAT of customer country and/or territory)

e-commerceBV


Let’s zoom in: OSS— OSS (Section 3 of Chapter 6 of Title XII)

— intra-community distance sales of goods (also by non-EU businesses)— services by EU businesses, not established in EU MS of consumption— if selected, must be applied to all covered supplies— if a local VAT registration is required, input VAT recovery in local VAT return

— quarterly electronic VAT return and VAT payment, both due one month after the tax period concerned amendments in subsequent return withinthree years of initial return.

— Policies and controls to manage local VAT

— Article 47j EU VAT Regulation 904/2010 on administrative cooperation and combating fraud

B2C sales of goods from non-EU


e-commerce, Inc.

Current: low value consignment relief (LVCR) for VAT (EUR 0–EUR 22)

— Import is VAT exempt if LVCR applies (maximum of EUR 22).

— Import is otherwise a VAT taxable event by default.

— Different LVCR for customs duties (maximum of EUR 150).

B2Ccustomers

B2Ccustomers

EUR 20NO IE VAT (LVCR)

EUR 150+ SE VAT (import)+ FI VAT (distance sale)


Future: no LVCR for VAT anymore, but new import schemes

— LVCR abolished.

— import-OSS regime or special import arrangement for postal and logistics companies (for ≤ EUR 150).

— No change and thus old rules if > EUR 150, which may trigger multiple regimes in parallel.

B2Ccustomers

B2Ccustomers

EUR 20+ IE VAT (LVCR abolished)

EUR 150NO SE VAT (VAT exempt if i-OSS)+ FI VAT (Non-eu distance sale)

e-commerce, Inc.


— Special import scheme or “import OSS” or “i-OSS” (Section 4 of Chapter 6 of Title XII)— ≤ EUR 150— EU businesses and non-EU businesses (which may require an intermediary)— if selected, must be applied to all non-EU distance sales of goods— if a local VAT registration is required, input VAT recovery in local VAT return— monthly electronic VAT return and VAT payment, both due one month after the tax period concerned— amendments in subsequent return within three years of initial return— import is VAT exempt if VAT identification number for import OSS has been timely provided to customs.

— Special import arrangement for postal and logistics companies (Chapter 7 of Title XII)— ≤ EUR 150— if import OSS is not used, then declarant can use special import arrangement— declaration and payment of import VAT by “declarant” on behalf of the “importer”— importer liable to pay VAT and declarant shall collect VAT from importer— monthly VAT declaration and VAT payment by declarant, both due one month after the month following the importation— no import VAT exemption.

Let’s zoom in: new import schemes

B2C sales of goods through platforms


Current: seller makes supply of goods to B2C customer through a platform

— Platform “facilitates”.

— Seller responsible for VAT in EU.

— Different if platform is (deemed) buy-sell.

— Unilateral platform liabilities (e.g. joint and several liabilities).

SellerLtd.

B2Ccustomers

Platform


Future: platform makes supply of goods to B2C customers under certain conditions

— Platform “facilitates”

— Platform responsible for VAT in EU for non-EU distance sales (maximum EUR 150) and for local EU sales by non-EU business (no maximum). Seller can zero rate.

— No change and thus old rules if > EUR 150, which may trigger multiple regimes in parallel.

SellerLtd.

B2Ccustomers

Platform


Let’s zoom in: platforms— Platform that facilitates is

— an electronic interface— allowing a customer and a supplier, selling goods through the electronic interface— to enter into contact which results in a supply of goods through that electronic interface to that customer.

— A platform does not facilitate if— either: it does not set T&C’s under which the supply of goods is made, and it is not involved in charging the

customer in respect of the payment made, and it is not involved in the ordering or delivery of the goods.— or if it only engages in one or more of the following: the processing of payments in relation to the supply of goods,

or the listing/advertising of goods, or redirecting/transferring customers to other electronic interfaces where goods are offered for sale, without any further intervention in the supply.

— New 10-year platform record keeping requirements, wider than goods (“the supply of goods or services to a non-taxable person within the Community”)

Next steps?


Next steps?

I am a customs

agent, postal

operator or courier

I am a EU business, but also

ship from non-EU

I am a platform or

I am not sure I am a

platform

I am a non-EU

business with EU

operations

I sell via a platform

Other

1

I am an online

seller or I may go and sell online

2 3 4 5 6 7


Next steps?

Assess impact on your

business, VAT TCF and ERP-

systems (“as is”vs “to be”)

Design required updates

Partner with the business, with IT

and with other stakeholders to

update

Update and test before

transitioning and going live

Monitor, improve and

prepare for the future

2020–2025destinationsingle VAT area


KPMG in Ireland


EU VAT Quick Fixes (2020)— Quick fix 1: Valid VAT number for zero VAT rate intra-community supplies— Quick fix 2: Harmonized proof of intra-community supplies— Quick fix 3: Attributing intra-community transport to chain transactions— Quick fix 4: Call-off stock


Definitive VAT regime for B2B goods (Proposed 2022 but TBC) The cornerstones of a new VAT system for the EU

Abolishing the VAT exemption on cross-border trade.

Agreement that the VAT should always be paid in the Member State of the final consumer and at the rate of that Member State.

A “one stop shop” online portal for businesses to take care of their cross-border VAT obligations in their own language.

Simplification of VAT invoicing allowing sellers to prepare invoicing according to the rules of his own country and/or territory.

Source: https://ec.europa.eu/taxation_customs/sites/taxation/files/factsheet_futurevat.pdf


PSP’s (2024) and SME’s (2025)— Payment Service Providers (Effective: 1 January 2024)

— Exchange of VAT payment data by PSP’s to EU Member States.— Aim to fight VAT fraud in the e-commerce sector, but not limited to payments in the e-commerce sector.— PSP’s will be required to exchange “VAT relevant data” for cross-border transactions so that non-compliant EU and non-EU online sellers

can be identified.— Update of the EU VAT Directive 2006/112 with new obligations for PSP’s.— Update of the EU VAT Regulation 904/2010 for administrative cooperation in order to combat VAT fraud, with “CESOP” and other measures.

— Special scheme for small enterprises (Effective: 1 January 2025)— New VAT exemption rules and new simplifications for VAT registration and VAT reporting. — New maximum VAT exemption threshold for SMEs in their country and/or territory of establishment to be set at €85,000.— Reduced/no filing obligations for:

— SMEs can also apply the VAT exemption threshold in EU member states other than that in which they are established if their totalturnover within the EU does not exceed €100,000 (currently a nil threshold).

— Further administrative reliefs in respect of VAT for SMEs.


Other areas of focus— VAT review of Financial Services

—Review launched in 2019 to review the current VAT exemptions and related issues in the FS and Insurance sectors.—Initial feedback from study due to be shared in Summer 2020.—Previous proposals for reform did not reach agreement — will this be different?

— Special scheme for travel agents—Public consultation due to open shortly on the special scheme for Travel Agents and Tour Operators (TOMS).—Follows a KPMG study for the European Commission in 2017 which identified differences in the implementation of the scheme across the EU.

— Upgrading the EU VAT system—EU Commission issued a paper in November 2019 for consultation to the VAT Expert Group (VEG) and Group on the Future of VAT (GFV) on

potential areas of focus and improvement for the VAT system, including keeping pace with new business models and the use of technologies.

— VAT transaction based reporting—Recent years have seen the growth of new VAT reporting and record-keeping obligations across EU Member States, but not harmonized.—Commission had scheduled a Fiscalis seminar to discuss further but currently postponed.

Questions?


Q&A


KPMG in IrelandM: +353 17 00 41 52E: [email protected]


KPMG Meijburg & CoM: +31 88 909 15 96E: [email protected]


Thank you

© 2020 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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navigating the eu vat roadmap from 2020 to 2025 · 2020-07-20 · navigating the eu vat roadmap...

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