EU Digital Market VAT Reform

Summary

Since 2015, the European Union has been gradually implementing a series of reforms designed to create a Digital Single Market across the EU. In setting its reform agenda, the European Commission looked beyond areas traditionally associated with the regulation of technology and digital services, and proposed changes in sectors that it believes have a significant effect on the pattern of EU cross-border digital trade. One such area was tax policy.

By 2021, the EU will implement a series of measures that are designed to significantly improve how companies operating online calculate VAT in the EU. This is the result of a unanimous vote of approval from the EU legislative bodies for a package of proposals that will incentivize cross-border trade, combat VAT fraud (especially by non-EU actors), ensure fair competition for EU businesses, and provide equal treatment for online publications.