European Commission Proposes to Extend VAT E-Commerce Package Deadline by Six Months

The European Commission (EC) has proposed to postpone the effective date of the new VAT e-commerce package. Rather than taking effect 1 Jan 2021, the new rules will take effect six months later, on 1 July 2021. The proposal, according to an EC statement, was made due to the COVID-19-related challenges confronting Member States and businesses.

Although the EC indicated on 14 Feb that most Member States confirmed they would be ready to apply the new VAT e-commerce package rules by January 2021, the impact of the global pandemic has altered those expectations in numerous ways:

• Member States shifted priorities and reallocated resources from the implementation of the VAT e-commerce package to fighting the pandemic.
• As a result, Member States could no longer guarantee their ability to finalise the preparatory work required to adhere to the new rules by 1 Jan 2021. This work includes the mandated transposition of the EU Directives into national law, as well as the implementation of IT systems within the tax bodies of Member States. Both efforts are at serious risk of delay.
• Postal and courier operators also stressed that it would be highly unlikely to have their IT systems ready and operational to meet VAT e-commerce package requirements by 1 Jan 2021.

Unanimous agreement among EU Member States is required in order for the EC’s proposal to be adopted and enter into force., Member States will then move to adopt and publish their local legislative measures by 30 June 2021 (rather than by 31 Dec 2020 as was required prior to the EC’s postponement proposal). We’ll keep you updated as the situation unfolds.