Proposed EU Legislation for Simplification of VAT Rules in E-commerce (Imports)

June 27, 20230

Type: Legislation Proposal


The rapid growth of e-commerce has necessitated adaptations to the value-added tax (VAT) system to ensure seamless and secure transactions between customers and sellers. In 2021, a significant overhaul of VAT rules for e-commerce introduced crucial simplifications for businesses, including the introduction of the import one-stop shop (IOSS). The IOSS allows businesses to declare and pay VAT for their business-to-consumer (B2C) distance sales of imported goods across the EU through a single VAT return, rather than managing separate obligations in each country of sale. However, the current IOSS implementation includes a threshold, limiting the declaration of goods with a value above €150 within the system. 

Proposed Changes

Recognizing the burden imposed on businesses by the €150 threshold, on 17th May 2023, the Commission proposed an expansion of the IOSS by completely removing the threshold. This proposed change aims to enable a broader range of businesses to benefit from the IOSS, resulting in reduced compliance costs. The proposal is currently undergoing a special legislative procedure, requiring unanimous support in the Council, and will involve consultation with the European Parliament and the European Economic and Social Committee. 

Effective date: 17 May 2023 




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