European Union - eCommerceEuropean Union - eCommerce
The European Union’s Digital Single Market Initiative
Creating a Digital Single Market (DSM) is one of the ten priorities of the European Commission (EC). The overall objective is to bring down barriers, regulatory or otherwise, to unlock online opportunities in Europe, from e-commerce to e-government. By doing so, the EU hopes to have a way with the current 28 fragmented markets and create one borderless market with harmonized legislation and rules for the benefit of businesses and consumers alike throughout Europe.
The EC set out a high-level vision in its May 6, 2015 DSM Strategy which will be followed by a number of specific and concrete legislative proposals and policy actions to be developed in 2015-2016. They are broad reaching and include reforming e-commerce sector, VAT, copyright, consumer protection and data privacy laws. DSM-related legislation will have a broad impact on U.S. companies doing business in Europe.
The three main pillars of the strategy are:
Pillar I: e-commerce
- better access for consumers and businesses to online goods and services across Europe
- remove key differences between the online and offline worlds to break down barriers to cross-border online activity.
Pillar II: digital networks and services
- achieve high-speed, secure and trustworthy infrastructures and content services
- get the right regulatory conditions for innovation, investment, fair competition and a level playing field.
Pillar III: growth potential of the European Digital Economy
- invest in ICT infrastructures and technologies such as Cloud computing and Big Data, and research and innovation to boost industrial competiveness and skills
- Increase interoperability and standardization
For more information: http://ec.europa.eu/priorities/digital-single-market/index_en.htm
DSM Strategy: http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52015DC0192&from=EN
The Electronic Commerce Directive (2000/31/EC) provides rules for online services in the EU. It requires providers to abide by rules in the country where they are established (country of origin). Online providers must respect consumer protection rules such as indicating contact details on their website, clearly identifying advertising and protecting against spam. The Directive also grants exemptions to liability for intermediaries that transmit illegal content by third parties and for unknowingly hosting content.
Comprehensive Market Research on e-commerce in the EU is available upon request.
Key Link: http://ec.europa.eu/internal_market/e-commerce/directive_en.htm
Value Added Tax (VAT)
The EU applies Value Added Tax (VAT) to sales by non-EU based companies of Electronically Supplied Services (ESS) to EU-based non-business customers. U.S. companies that are covered by the rule must collect and submit VAT to EU tax authorities. From 1 January 2015, all supplies of telecommunications, broadcasting and electronic services are taxable at the place where the customer resides. In the case of businesses this means either the country where it is registered or the country where it has fixed premises receiving the service. In the case of consumers, it is where they are registered, have their permanent address, or usually live.
As part of the legislative changes of 2015, the Commission launched the Mini One Stop Shop (MOSS) scheme, the use of which is optional. It is meant to facilitate the sales of ESS from taxable to non-taxable persons (B2C) located in Member States in which the sellers do not have an establishment to account for the VAT.
This plan allows taxable persons (sellers) to avoid registering in each Member State of consumption. A taxable person who is registered for the Mini One Stop Shop in a Member State (the Member State of Identification) can electronically submit quarterly mini One Stop Shop VAT returns detailing supplies of ESS to non-taxable persons in other Member States (the Member State(s) of consumption), along with the VAT due.
The Commission has received numerous complaints in relation to the new rules on ESS and is in the process of revising them. The revised legislation is expected to be introduced by the end of 2016 and will include reduced rates for e-publications matching those of printed ones and a VAT simplification package for SMEs.
The most important pieces of legislation on VAT are the EU VAT Directive 2006/112/EC and its Implementing Regulation 282/2011.
Further information relating to VAT on ESS:
European Union 28 eCommerce Industry Trade Development and Promotion eCommerce