On January 1, 2015, the European Union's new scheme for imposing VAT on digital goods and e-services goes into effect. The major change is that all vendors need to use destination sourcing. Prior to that, a vendor in the EU could register in one country, such as Luxembourg with its low 15% VAT rate, and collect VAT at that rate.
To ease compliance, the EU will use the "mini one-stop shop" or MOSS. This allows a vendor to register in one country and process filings through that online system. The vendor must still collect VAT based on the destination country's rate, but instead of quarterly filing in all EU countries where it has customers, the vendor can do the quarterly filing just in the one country. That country then makes sure that the VAT gets to the appropriate country.
Is this something that might make the Marketplace Fairness Act more acceptable to vendors? What do you think? And, what do you think will happen with this act in the 114th Congress?
For more on this topic, please see my BloombergBNA article of 11/21/14 - here.
Other recent “Sales Tax Policy - Tales & Trends” posts by Annette Nellen, CPA, ESQ:
- Sales Tax Policy Outlook for 2017
- Would Broader Sales Tax Base Deliver Simplification - and Savings?
- Trailing Nexus - When Does It End?
- Sales Tax As Penalty?
- Tax on Short-Term Rentals – Taxing on Landlords & Municipalities