1. VAT Expert Group – 24 September 2018
Implementation of the VAT e-commerce package – State of play Agenda item 2
VAT Expert Group – 24 September 2018

2. Content The VAT e-commerce package
Implementation – VAT legislative aspects
Amendments to Council Implementing Regulation 282/2011
Amendments to Commission Implementing Regulation 815/2012
Amendments to VAT Directive 2006/112
Planning
Implementation – Customs aspects
Electronic verification of Import One Stop Shop (IOSS) VAT Id. Nos. in import declarations
Exchange of data on monthly imports under the IOSS
Other activities impacting the import of low value consignments
Implementation – IT development (VAT and customs)
The Master Plan
Business cases
Supporting measures

3. 1. The VAT e-commerce package

4. VAT e-commerce package of 5 December 2017
Package of 3 legal acts (OJ L 348 of ):
Council Directive (EU) 2017/2455 amending Directive 2006/112/EC (the VAT Directive) and 2009/132/EC (VAT import exemptions)
Council Regulation (EU) 2017/2454 amending Regulation (EU) 904/2010 (on administrative cooperation and combating fraud)
Council Implementing Regulation (EU) 2459/2017 amending Regulation (EU) 282/2011 (the VAT Implementing Regulation)

5. Main parts Improvements of the current One Stop Shop (OSS)
Extension of the OSS (Union scheme) to:
Services other than telecommunications, broadcasting and electronically supplied services (TBE services)
Intra-EU distance sales of goods
Extension of the OSS (non-Union Scheme) to services other than TBE services
Extension of the OSS (Import scheme) to distance sales of goods supplied from third countries or territories
Simplified arrangements for declaration and payment of import VAT on low value consignments where the OSS is not used
Special provisions applicable to supplies facilitated by electronic interfaces
All provisions apply as of 2021, except certain improvements of the current OSS which apply as of 2019

6. 1) Improvements of the current OSS
As of 2019 (no IT impact)
Optional threshold of EUR for intra-EU supplies of TBE services, below which they remain taxable in the MS of the supplier
Optional threshold of EUR – presumption of the customer location - only one piece of evidence required
Invoicing: rules of the MS of identification (MSI)
Close a gap in the current MOSS: A business not established in the EU but having a VAT registration in the EU (e.g. for occasional transactions) can make use of the non-Union OSS (required a minor legal change: see Commission Implementing Regulation (EU) 2018/980 of 11/7/2018 modifying Regulation 815/2012 )
As of 2021 (IT impact)
The deadline for submitting VAT returns and making VAT payments is extended from 20 days to the end of the month following the tax period
Corrections to previous VAT returns can be made in a subsequent return instead of the initial return to be corrected (until 3 years back)

7. 2) Extension of the OSS (Union scheme)
Extension to supplies of services other than TBE services:
The OSS can be used to declare and pay VAT on ALL intra-EU B2C supplies of services
Extension to intra-EU distance sales of goods (B2C):
Become systematically subject to VAT in the MS of the customer (where the transport ends)
Current thresholds of EUR to EUR (per MS of destination) are removed => replaced by EUR threshold (supplies to ALL MS)
The OSS can be used to declare and pay VAT due in other MS
No more invoice requirement for such sales

8. 3) Extension of the OSS (non-Union scheme)
Extension to supplies of services other than TBE services:
The OSS can be used to declare and pay VAT
on ALL B2C supplies of services
supplied by 3rd country suppliers

9. 4) Extension of the OSS to distance sales of imported goods (Import scheme)
Abolish import exemption for consignments of a value ≤ EUR 10-22
All distance sales from third countries to the EU are subject to VAT upon importation
For consignments of a value ≤ EUR 150, the Import One-Stop Shop (IOSS) can be used to declare and pay the VAT
The vendor (directly or via an intermediary) registers for the IOSS in a MS (the MS of Identification or MSI)
The vendor charges the VAT to the customer at the time of supply, defined as the time when the payment is accepted
He declares and pays VAT to the MSI on the basis of a monthly OSS VAT return; the MSI transfers the VAT to all MS of consumption (MSC)
These consignments are VAT exempt upon importation → the IOSS VAT number to be communicated to customs at the latest upon lodging of the import declaration
Each MS must compile a monthly listing including the total value of imports under the IOSS, per IOSS VAT No

10. 5) Special arrangements for declaration and payment of import VAT if IOSS is not used
Why?
Abolition of the import exemption for consignments of a value ≤ EUR 10-22
Even with a high take-up of the IOSS, the number of imported low value consignments will be high in absolute terms
What?
MS MUST allow the use of (existing) simplified customs procedures for monthly payment based on a global declaration of import VAT (to customs)
MS MAY allow the systematic use of the standard VAT rate
The declarant must only pay VAT which has effectively been collected from the consignee
The declarant must take appropriate measures to ensure correct VAT payment by the consignee
Record keeping obligations for the declarant
Note:
Standard import declaration required for all small consignments  the volume of imports will require the recourse to simplified declarations (see Agenda Item 4)

11. 2. Implementation – VAT legislative aspects

12. Discussions on implementing provisions
With Member States in the Group on the Future of VAT (GFV)
22/1/2018; 9/2/2018 (VAT-customs); 12/3/2018 (VAT-customs); 13/6/2018; 6-7/9/2018 (VAT-customs)
With business in the extended VAT Expert Group (VEG)
5/2/2018; 26/2/2018; 24/9/2018
Bilaterally with the with main business stakeholders (marketplaces, couriers and postal operators)
25/4/2018 and 18/6/2018 (marketplaces)
22/6/2018 (postal operators)

13. a) Modification Council IR 282/2011 (1)
Align existing provisions with extended OSS and IOSS
Modifications linked to the operation of the extended OSS
Corrections => as of 1/1/2021 new system
Old rules will continue for Q to Q returns (up to beginning 2024)
Identification number intermediary ≠ VAT id No.
Quarantine period for voluntary deregistration taken out
Deletion of intermediary from identification registry and consequences for taxable person he represented
Record keeping obligations => name of customer is deleted
Modifications linked to Article 14(4) VAT Directive
When is supplier deemed to have intervened indirectly in the dispatch/transport
When is this not the case

14. Modification Council IR 282/2011 (2)
Modifications linked to deemed supplier provisions (see agenda item 3.1)
Clarification of certain terms used in the VAT Directive
When is an electronic interface (EI) considered to facilitate the supply
When is it NOT considered to facilitate the supply
Deeming provisions to enhance legal certainty for deemed suppliers
Transaction is presumed to be B2C
Not liable for excess VAT when he did not know and could not have known that information obtained from a third party was incorrect
Other modifications
When does taxable event occur
Details on consequences of exclusion from OSS and IOSS
Reminder to be sent by MSI when failure to submit records
Possibility to register as of 1/10/2020

15. b) Modification VAT Directive
Application of Article 14(a) of the VAT Directive – electronic interfaces (EIs) facilitating certain B2C supplies of goods are deemed to have received and supplied the goods themselves (see agenda item 3.1)
Special arrangements when IOSS is not used: align deadline for global monthly payment with customs rules (see agenda item 5)

16. c) Modification Commission IR 815/2012 (1)
OSS registration information
Aligning registration information of the Union and non-Union scheme to the extended scope of the OSS
Lay down the detailed registration information in the Import OSS (for the taxable person and the intermediary)
Define the format of the Import OSS Id No. and of the identification number of the intermediary
OSS VAT return content
Distinction in VAT return between goods and services
Insert a new part in the VAT return for corrections to previous VAT returns until 3 years back (indication of the period concerned)

17. Modification Commission IR 815/2012 (2)
Creation of an Import OSS VAT id No. database
Allowing automatic exchange of Import OSS Vat identification Nos. between the MSI and the other MS
In a manner that ensures at all times a correct up-to-date view of all national registry data provided by all MS
Import OSS VAT identification No. database ≠ VIES VAT identification No. database
Information to be kept in that database: only IOSS VAT id. Nos.
Other changes
New e-forms and update of existing e-forms
Request for records and organisation of administrative enquiries (audits)
To be proposed at a later stage (together with changes required to implement the general review of Regulation 904/2010)

18. E-forms (provisional)
d) Planning
(a) Modification VAT Directive
(b) Modification VAT Implementing Regulation 282/2011
Q4 2018
Commission proposal
Q4 2019
Council adoption
1/1/2021
Entry into application
(c) Modification Commission Implementing Regulation 815/2012
General
E-forms (provisional)
23 October 2018
Presentation of proposal to SCAC
Q – Q2 2019
Discussion in Fiscalis Project Group
Q2 2019
Vote in SCAC
Q3 2019
Commission adoption
Q1 2020
1/1/2021
Entry into application
1/1/2021 or beginning 2022
Entry into application

19. 3. Implementation – Customs aspects

20. Electronic verification of IOSS VAT Id. Nos. in import declarations
MS have to provide for electronic verification of the validity of IOSS VAT Id. Nos. mentioned in an import declaration (Article 47h of Regulation 904/2010)
Requires the insertion of the IOSS VAT registration No. in the import declaration
This will generate changes in Annex B of the Union Customs Code Delegated (UCC DA) and Implementing Act (UCC IA)
Work ongoing in the Customs Expert Group on Data Integration and Harmonisation (DIH Committee) to identify the necessary changes to the import declaration
See working document DIH 17/003 REV 4

21. b) Exchange of monthly data on imports under the IOSS
MS shall store in an electronic system, the total value of imports of goods under the IOSS, per IOSS VAT Id. No. (Article 17(1)(e) of Regulation 904/2010)
MS shall grant to competent authority of any other MS automated access to this information
How to compile this listing: the Surveillance Reception Application (SURV-RECAPP) can be used for that purpose (as confirmed by the Commission Legal Service)
This may generate changes in Annex B of the Union Customs Code Delegated (UCC DA) and Implementing Act (UCC IA)

22. c) Other activities impacting the imports of low value consignments (1)
C2020 Project Group on Import and Export Formalities related to Low Value Consignments (LVCs) – Interim report of 24 May 2018 (see agenda item 4):
Main recommendation: develop a customs declaration with reduced dataset for all LVCs of a value ≤ EUR 150:
B2C; B2B; C2C
Whether or not the IOSS is used
Irrespective of the declarant (postal operator, other economic operator, private person)
Content:
Dataset of 23 data elements based on the customs declaration in postal traffic (column H6 of Annex B UCC-DA)
Including a data element to insert the IOSS VAT Id. No. and total amount invoiced
Timing for its development to be aligned with the VAT e-commerce date of entry into force
Planning: work to continue in the Customs Expert Groups – Import and Export Formalities (CEG-FOR) and Data Integration and Harmonisation (DIH)

23. Other activities impacting the imports of low value consignments (2)
2) Development of ICS2 (Import Control System Upgrade)
What is ICS? The IT system for lodging and processing the electronic Entry Summary Declaration (ENS) providing advance cargo information for shipments into the EU (as of 2011), for safety and security reasons
postal shipments were exempt from the ENS submission obligation as postal processes were mainly paper-based
ICS2: Project to strengthen the safety and security of the supply chain for all modes of transport and especially air cargo, by means of improving data quality, data filing, data availability and data sharing as regards the ENS
ICS2 will cover postal shipments

24. The implementation of ICS2 requires the availability of electronic source data for all imported small consignments, at the latest when ICS2 is implemented
Electronic source data are also a prerequisite for IOSS to work, in view of the large amount of parcels being imported
When the IOSS is used, the IOSS VAT Id. No. will have to be included in the dataset to be transmitted electronically
Timing of ICS2 release:
The concept of advance electronic data for postal items has been endorsed by the UPU (Universal Postal Union) and will be implemented when all the necessary IT systems will be available
Phase
Scope
Release date 1
Air express pre loading and postal shipments pre loading (covers 90% of the consignments)
15/03/2021 2
Air general cargo; air express full and postal by air full
01/03/2023 3
Rail, road, maritime
01/03/2024

25. 4. Implementation – IT development (VAT and customs)

26. a) The Master Plan
The OSS IT systems will build on the existing MOSS which needs to be extended and to which a new IOSS module will need to be added
Needs to cope with higher capacity and greater sizes of messages
A Master Plan has been drafted
To ensure effective and coherent management of the implementation of the e-commerce package
It identified 6 business cases covering the various aspects
Is a management tool => no formal adoption
Was presented to and discussed at the IT subcommittee of the Standing Committee on Administrative Cooperation (SCIT) on 4 May 2018

27. b) The Business cases (1)
1. Extension of the EU and non-EU schemes
To cover all services and intra-EU distance sales of goods
2. Development of IOSS
To cover distance sales of imported goods
3. Make IOSS VAT Id. Nos. accessible to Customs authorities
The MS of importation shall be able to identify imports of goods for which the IOSS is used and to carry out an electronic verification of the validity of the IOSS VAT Id. Nos.
Need to create a database including all valid IOSS VAT Id. Nos. to be made accessible online to Customs authorities by Tax authorities
4. Make the global amount of sales using IOSS available to Tax Administrations on a monthly basis
Possible use of SURV-RECAPP

28. b) The Business cases (2)
5. Extension of the VAT rates module in TIC (Taxation Information and Communication database)
Only include goods and services not at standard VAT rate
For goods: link to HS code
For services: what code to be used: CPA (Statistical classification of products by activity)?
6. Extension of the e-forms
To supports the exchange of information between MS for requests for records and audits of taxable persons

29. Discussion with MS on the 6 business cases:
On the VAT side, a Fiscalis 2020 Project Group has been created to which all MS participate. Several meetings are organised between May 2018 and end 2019
Cover all business cases
A first workshop took place on 4 July 2018
On the customs side, a C2020 Project Group has been created
Call for interest sent out on 29/5/2018 to C2020 Programme Coordinators
12 MS will participate: DK, FI, FR, DE, EL, IT, LV, LT, NL, PT, ES, SE
Examine the IT impact on customs (business cases 3 and 4)
Kick-off meeting: September 2018
4-5 meetings between September 2018 and June 2019

30. 5. Supporting measures

31. Supporting measures
Implementation strategy will need to be developed by a joint Tax-Customs group for:
Development of a compliance Strategy
Development of guidelines for businesses
Development of an audit guide
Communication strategy similar to what was done for MOSS
Dedicated website (MOSS Portal → OSS Portal)
Guidelines in all EU languages and in Chinese, Japanese and Russian
National information campaigns for businesses by MS
International conferences by the EU in main trading partner countries
China, US, India, Japan, Australia, etc.
Other social media
Timing
Will start as soon as legislation is adopted, normally Q and will take most of the time in 2020

32. DG TAXUD – Unit C1