The EU has opened a public consultation on VAT rules for businesses selling online in Europe. It is seeking opinions from businesses, the public and representative organisations on the following:

• VAT rules for B2C cross-border supplies of goods and services; and
• implementation of the 2015 changes to the VAT 'place of supply' rules and the Mini One Stops Shop.

The 'place of supply' rules came into force on 1 January 2015, stipulating that VAT on all digital goods – telecommunications, broadcasting and electronic services – is levied where the customer is based, not where the supplier is located. It does not apply to tangible goods. The regulation gave rise, however, to the complication of dealing with numerous different national tax systems, which is a “real obstacle” for vendors.

To counter this, a 'Mini One Stop Shop' was introduced to simplify the process, reduce the costs and ease administrative burdens. The EU says this should be extended to tangible goods ordered online both within and outside the EU. This would mean that businesses would be able to make a single VAT declaration and payment in the country where they are located.

The consultation is part of the Commission's Digital Single Market Strategy for Europe and will inform its draft legislative proposals in 2016. The consultation will run for 12 weeks and end on 18 December 2015.

The consultation paper is available here.