Labour MEPs have urged the European Commission to address concerns about new EU rules on VAT for digital services, books 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.
Andrus Ansip, Vice-President for the Digital Single Market, addressed MEPs last night on the issue.
Neena Gill MEP, 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 welcome the idea of the Commission 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.
"I, together with 264 000 early-stage businesses in the UK alone, look forward to clear and convincing answers from the Commission on these questions."
Anneliese Dodds MEP, member of the European Parliament economic and monetary affairs committee, said:
"Yet again, Commissioner Ansip has failed to give us any detail on what he plans to do about the VATMOSS mess. Labour MEPs have been lobbying him since before Christmas to do something about this, and we've had nothing but delays and vague answers.
"For the thousands of our constituents who have written to us in desperation about these new rules, simply saying 'we will look at this in 2016' is not good enough. People are worried about their very livelihoods here.
"We didn't get the answers we needed yesterday from Commissioner Ansip, so we will be writing again to him immediately to get a clear decision on what happens next."
Catherine Stihler MEP, vice chair of the European Parliament internal market and consumer protection committee, added:
"I welcome the Digital Single Market Strategy by the European Commission. 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, new place of supply VAT rules introduced from January this year need to be re-assessed and I call 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.
"I am particularly pleased to hear Commissioner Ansip's statement that hard copy books and e-books should be taxed at the same rate. This disparity needs to end."