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~ Wijnand Jongen ~

COLUMN

VAT & TAXES – NEED FOR A SINGLE VAT REGISTRATION
FOR EUROPE

n the past two years, retailers have gained a lot a fundamental and concrete simplification of the overall
of experience in digitalisation. This accelera- complex VAT system for businesses.
Ition was significantly pushed by the pandemic,
during which e-commerce and retail played an es- Limits of the current VAT OSS system
sential role. The rise of omnichannel retail and the However, the OSS is not yet a game-changer. The OSS can
acceleration of the digital transformation of many only be used for sales of goods or services to final consumers
businesses as a consequence of the COVID-19 crisis (B2C) by those EU businesses that sell cross-border within
has further stressed the importance of continuing to the EU and not by those that store and fulfil stock locally
remove single market barriers, making it easier and in several EU states. Achieving shorter delivery times to
cheaper to do business cross-border in the EU. consumers and reducing shipping costs are paramount
for EU businesses. That is why these sellers often need or
In this context, minimising the administrative costs of VAT decide to stock merchandise in multiple EU storage facilities
compliance for businesses is a priority. The complexity of VAT (either owned by the e-merchant or via a third-party
obligations across the European Union makes it costly, time- warehouse provider) outside their home country and ship
consuming and burdensome for e-merchants to engage in EU from these remote distribution hubs to the final consumer.
cross-border trade and comply with the different VAT duties. Storing inventory in the different EU Member States allows
This means that the single market cannot be fully exploited responding to consumer demands for faster delivery while
yet by many businesses, especially by SMEs, which are the reducing the logistical and environmental footprint.
backbone of Europe’s economy.
In the current system, neither movements of retail inventory
A reduction of the VAT-related barriers to cross-border trade across EU countries, nor the onward sale of that inventory,
in the EU is hence much needed. A single VAT identification are eligible for the VAT OSS system, resulting in VAT
number will be a huge simplifier in reducing the need for registration requirements in every EU country where goods
costly and time-consuming multiple VAT registrations that are stored. This means that, despite the 2021 changes
are today still required despite the 2021 changes introduced introduced by the VAT E-commerce Package, businesses will
by the VAT E-commerce Package. still be required to register for VAT in every country in which
they store goods
The One Stop “THE VAT ONE-STOP SHOP (OSS), (even in situations
Shop is already where sales activities
operational WHICH BECAME OPERATIONAL ON 1 are not undertaken
The VAT One-Stop in the storage
Shop (OSS), which JULY 2021, HAS BEEN AN ENABLER OF location). Obtaining
became operational multiple VAT
on 1 July 2021, has NEW BUSINESS OPPORTUNITIES FOR registration numbers
been an enabler is proven to be a
of new business EUROPEAN COMPANIES.” significant burden
opportunities for businesses,
for European requiring them to
companies. It go through lengthy
provided a first fundamental and concrete simplification for and costly processes in the various Member States, where
businesses, as it consistently simplified the VAT compliance they need a VAT registration number for each country. These
for companies, especially the SMEs willing to trade on an complexities have an adverse and damaging effect on EU
EU cross-border basis. The OSS allows, in fact, registering cross-border trade.
for VAT, filing VAT returns and paying for the VAT due
in multiple EU countries via just one EU country. This is Without this change, the single market will continue to have

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