Proposal for a COUNCIL DIRECTIVE amending Directive 2006/112/EC as regards VAT rules relating to taxable persons who facilitate distance sales of imported goods and the application of the special scheme for distance sales of goods imported from third territories or third countries and special arrangements for declaration and payment of import VAT
Date: 2023-05-17
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: VAT, electronic commerce, goods and services, import (EU), information system, simplification of formalities, supplier, tax collection, taxpayer, third country

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   EUROPEAN COMMISSION  Brussels, 17.5.2023  COM(2023) 262 final 2023/0158 (CNS)  Proposal for a COUNCIL DIRECTIVE amending Directive 2006/112/EC as regards VAT rules relating to taxable persons who facilitate distance sales of imported goods and the application of the special scheme for distance sales of goods imported from third territories or third countries and special arrangements for declaration and payment of import VAT  
 
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

The  present  initiative  is,  together  with  the  proposal  for  a  Regulation  of  the  European 
Parliament  and  of  the  Council  establishing  the  Union  Customs  Code,  the  European  Union 
Customs  Data  Hub  and  the  European  Union  Customs  Authority,  and  repealing  Regulation 
(EU)  952/2013  (“UCC  revision”),  and  the  proposal  for  a  Council  Regulation  amending 
Council  Regulation  (EC)  No  1186/2009  of  16  November  2009  setting  up  a  Community 
system  of  reliefs  from  customs  duty  and  Council  Regulation  (EEC)  No  2658/87  of  23  July 
1987 on the tariff and statistical nomenclature and on the Common Customs Tariff, part of a 
broad and comprehensive reform of the Customs Union. 
Value added tax (VAT) is a major source of government revenue in all EU Member States.1 
In 2020, its contribution to total tax receipts ranged from 20% to 50% across Member States 
and accounted for approximately 26% of the total yearly tax receipts for general government 
in  the  EU27.  It  is  also  a  key  source  of  financing  for  the  EU  budget  since  0.3%  of  VAT 
collected at national level is transferred to the EU as own resources, representing 12% of the 
total EU budget. 

The revenue loss, known as the ‘VAT gap’, delineates the issues caused by sub-optimal VAT 
collection and control. Estimated at a total of EUR 93 billion for 2020, a significant part of 
this loss is due to missing trader intra-Community (MTIC) fraud. The VAT gap also includes 
revenues lost to domestic VAT fraud and evasion, VAT avoidance, bankruptcies and financial 
insolvencies,  as  well  as  miscalculations  and  administrative  errors.  The  VAT  system  is  not 
only  prone  to  fraud,  but  has  also  become  increasingly  complex  and  burdensome  for 
businesses.  

In  response  to  the  explosive  growth  in  e-commerce  activity  and  a  fragmented  regulatory 
framework for the collection of VAT on e-commerce supplies,  on 1 July  2021,  the VAT e-
commerce package introduced a number of VAT and customs related  reforms to  modernise 
and simplify the collection of tax on e-commerce transactions. The implementation of the e-
commerce package has proven to be a great success as shown in the results of an evaluation 
that  was  conducted  in  relation  to  the  first  6  months  of  application.  This  was  confirmed  by 
Member States in the Council Conclusions2 of the March 2022 ECOFIN. 

On  the  import  side,  one  of  the  primary  objectives  of  the  VAT  e-commerce  package  was  to 
level the playing field for EU established suppliers by addressing distortive rules that led to 
competition  issues  in  the  e-commerce  market.  The  VAT  exemption  for  the  importation  of 
small value consignments not exceeding EUR 22 was abolished. As a result, VAT is now due 
on  all  commercial  goods  imported  into  Europe  from  a  third  country  or  third  territory, 
irrespective of their value.  

With the abolition of the EUR 22 threshold, the e-commerce package introduced a number of 
simplifications  to  help  ease  the  compliance  burden  for  traders  making  distance  sales  of 
imported goods into the EU.  Albeit, the scope of these simplifications was limited to imports 
with an intrinsic value not exceeding EUR 150. 

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2 

Tax revenue statistics - Statistics Explained (europa.eu), Eurostat. 
Council conclusions on the implementation of the VAT e-commerce package, ST 7104/22 of 15 March 2022. 

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One such simplication is the Import One-Stop Shop (IOSS) ), which is however only available 
for distance sales of imported goods with an intrinsic value not exceeding EUR 150  (as the 
VAT e-commerce package did not remove the EUR 150 customs duty exemption threshold). 
Traders  who opt  to  use the  IOSS  do not  need to  register for VAT in  each Member State in 
which their eligible supplies of imported goods to consumers take place.  When the  IOSS is 
used, the VAT due on those supplies is collected upfront at the time of the supply, meaning 
that  VAT  does  not  have  to  be  collected  at  the  time  of  importation.  However,  the  regime  is 
different for goods with a value above EUR 150, as such distance sales of imported goods are 
liable to import VAT at the time of importation (VAT is not collected upfront).  
The  proposal  to  reform  the  customs  framework3  creates  a  clear  rationale  to  delete  the  EUR 
150 threshold, which currently limits the application of the IOSS to distance sales of imported 
goods not exceeding EUR 150.  That proposal introduces the concept of a ‘deemed importer’, 
who is any person involved in distance sales of goods to be imported from third territories or 
third countries and who is authorised to use the IOSS. Such persons will incur a customs debt 
when  the  payment  for  the  distance  sale  is  accepted  and  will  be  able  to  apply  a  ‘simplified 
tariff treatment for distance sales’ when determining the appropriate customs value.  

Under  the  simplified  tariff  treatment,  the  deemed  importer  can  apply  one  of  the  ‘bucket’ 
tariffs  to  the  customs  value.  The  deemed  importer  will  therefore  have  all  the  information 
required, including the duties due by reason of importation, to properly calculate the taxable 
amount  upon  which  VAT  must  be  applied.  Therefore,  it  is  opportune  to  amend  Council 
Directive 2006/112/EC by deleting the EUR 150 threshold that applies to the IOSS.   

The removal of the EUR 150 IOSS threshold is warranted in its own right as it will help to 
support the objective of a single VAT registration in the Union by allowing IOSS registered 
traders  to  declare  and  remit  the  VAT  due  on  all  their  eligible  supplies  of  IOSS  goods, 
irrespective of their value. While the removal of the IOSS threshold is not dependent on the 
implementation  of  the  customs  reforms,  it  will,  nevertheless,  support  the  reform  of  the 
customs framework as it will maximise the benefits that the customs oriented simplifications 
will  create  for  the  calculation  of  VAT  on  distance  sales  of  imported  goods.  As  the  deemed 
importer,  an  IOSS  registered  trader  will  have  all  of  the  information  needed  to  calculate  the 
correct  amount  of  VAT  payable  on  all  their  eligible  distance  sales  of  imported  goods.  This 
measure  will  therefore  also  help  to  prevent  undervaluation  in  relation  to  distance  sales  of 
imported goods as the correct amount of VAT will be collected at the time of supply, which is 
when the payment for the e-commerce transaction is accepted. 

Moreover,  this  proposal  aims  to  further  reduce  the  compliance  burden  faced  by  traders 
making  distance  sales  of  imported  goods  by  also  extending  the  simplification  known  as  the 
‘special arrangements’.  

When  certain  conditions  are  met,  the  special  arrangements  allow  postal  operators,  express 
carriers,  customs  agents  and  other  operators  who  fulfil  the  customs  import  declarations  on 
behalf of the customer to declare and remit the collected VAT on those imports on a monthly 
basis.  The  special  arrangements  are  an  optional  simplification  and  apply,  subject  to 
conditions,  to  the  importation  of  goods  with  an  intrinsic  value  not  exceeding  EUR  150, 
excluding excise goods. Under this proposal the EUR 150 threshold, which currently applies 
to  the  special  arrangements,  will  also  be  removed.  This  iniatitve  will  further  ease  the 
compliance burden and costs associated with the importation of goods above EUR 150. 

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Revision of the Union Customs Code (europa.eu)’ 

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In addition to the IOSS simplification and the special arrangements, the e-commerce package 
also  provided  for  the  deemed  liability  of  marketplaces  and  platforms,  where  they  facilitate 
distance sales of goods imported into the EU with an intrinsic value not exceeding EUR 150. 
The  ‘deemed  supplier’  regime  is  a  key  reform  that  is  designed  to  mitigate  the  risk  of  non-
payment of VAT. Where this regime applies, individual sellers on marketplaces do not have 
to register for VAT in respect of supplies covered by the deemed supplier rule. This particular 
measure  removes  the  compliance  burden  from  sellers  who  operate  via  marketplaces.  It  also 
bolsters compliance as it streamlines the VAT obligations of thousands of underlying sellers 
by  deeming  the  marketplace  as  the  person  liable  to  declare  and  pay  the  VAT  due  on  those 
supplies. This initiative proposed the removal of the EUR 150 threshold to further expand the 
scope  of  the  deemed  supplier  regime  to  cover  all  distance  sales  of  imported  goods  into  the 
EU,  irrespective  of  their  value.  Consequently,  this  proposal  also  aims  to  reduce  the 
compliance burden for taxable persons making distance sales of imported goods into the EU 
via  marketplaces,  which  is  in  line  with  the  key  objectives  of  the  VAT  in  the  Digital  Age 
(ViDA) proposal.   

Building on the moment of the VAT e-commerce reforms, the Commission adopted the VAT 
in the Digital Age (ViDA) proposal in December 2022, as announced in the 2020 Action Plan 
for fair and simple taxation supporting the recovery.4  

This current proposal seeks to further adapt the EU VAT framework by expanding the range 
of supplies covered by the IOSS, Special Arrangements and deemed supplier regime. Under 
this proposal, the IOSS could be used to declare and remit the VAT due on all distance sales 
of imported goods into the EU, irrespective of their value, but not including products subject 
to  excise  duties,  which  remain  excluded  from  the  scheme.  Likewise,  both  the  speical 
arrangements  and  the  deemed  supplier  regime  will  be  extended  by  removing  the  EUR  150 
threshold, which currently limits their appication and effectiveness. This initiative will further 
stengthen  the  concept  of  a  single  VAT  registration  in  the  EU.  Therefore,  this  proposal  is 
coherent  with  the  ViDA  proposal  and  its  objective  to  reduce  the  compliance  burden  for 
taxable  persons,  as  it  will  remove  the  multiple  registration  obligations  that  persons  making 
distance sales of imported goods above EUR 150 may otherwise face. 

Consistency with existing policy provisions in the policy area 

• 
This initiative is consistent with the ViDA proposal5, which was adopted by the Commission 
on 8 December 2022 and is currently being discussed in Council. The ViDA proposal aims to 
modernise  and  reshape  the  EU  system  of  VAT  to  the  the  digital  era.  In  fact,  the  ViDA 
proposal represents an extensive and multifaceted package of  reforms with three key primary 
aims, one of which is to enhance the concept of a single VAT registration (SVR) in the EU.  

One  of  the  main  objectives  of  the  ViDA  proposal  is  to  limit  the  need  for  multiple  VAT 
registrations in the EU. The ViDA proposal strives to achieve this aim by expanding the scope 
of the simplification tools used to declare and remit the VAT due on distance sales of goods6. 
The ViDA reforms will advance the concept of a Single VAT Registration (SVR) in the EU 
by  expanding  the  range  of  supplies  covered  by  Union  One-Stop  Shop  (Union  OSS) 
simplification,  which  forms  part  of  the  suite  of  One-Stop  Shop  (OSS)  simplifications.  This 

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VAT in the digital age (europa.eu). 
Proposal for a COUNCIL DIRECTIVE amending Directive 2006/112/EC as regards VAT rules for the digital age 
(COM/2022/701  final).  Proposal  for  a  COUNCIL  REGULATION  amending  Regulation  (EU)  No  904/2010  as 
regards the VAT administrative cooperation arrangements needed for the digital age (COM/2022/703).  Proposal 
for  a  COUNCIL  IMPLEMENTING  REGULATION  amending  Implementing  Regulation  (EU)  No  282/2011  as 
regards information requirements for certain VAT schemes (COM/2022/704 final.) 
https://ec.europa.eu/taxation_customs/business/vat/vat-e-commerce_en 

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proposal aims to further reduce the instances in which a taxable person making distance sales 
of imported goods has to register for VAT in more than one Member State by expanding the 
deemed supplier rule and by expanding the IOSS and special arrangements to cover imported 
goods above EUR 150. Therefore, both this initiative and the ViDA proposal help to support 
the aim of a single VAT registration in the EU. 

The  ViDA  proposal  also  imposed  the  mandatory  use  of  the  IOSS  for  platforms.  Under  the 
ViDA proposal, the IOSS will be mandatory for marketplaces acting as deemed supplier for 
certain  distance  sales  of  imported  goods.  Under  this  proposal,  marketplaces  that  facilitate 
distance sales of imported goods above EUR 150 will now be the deemed supplier in respect 
of those supplies and will, as a consequence, be obliged to declare and remit the VAT due on 
those supplies via the IOSS. This reform further protects the EU VAT system and strengthens 
the fight against VAT fraud as the compliance effort will now be focused on an even smaller 
pool of marketplaces (taxable persons) who are well versed in the field of VAT compliance 
and  who,  from  a  customs  perspective,  will  also  be  the  deemed  importer  for  all  supplies  of 
imported  goods  that  they  facilitate  via  their  platform.  Futhermore,  this  measure  will  reduce 
the  risk  of  undervaluation  in  relation  to  distance  sales  of  imported  goods.  As  the  deemed 
importer, the marketplace will have all of the component ingredients at its disposal, which are 
needed to calculate the correct amount of VAT payable on such supplies. Undervaluation will 
no longer be possible as the marketplace will charge VAT upfront on the listed sales price of 
the  goods.  When  determining  the  taxable  amount  upon  which  VAT  is  levied,  the  IOSS-
registered marketplace, acting as both deemed supplier and deemed importer, will include all 
factors  such  as  the  taxes,  duties  and  levies  due  by  reason  of  importation,  along  with  other 
incidental expenses such  transport and insurance costs, that are required to properly calculate 
the  taxable  amount  for  VAT  purposes.  Consequently,  the  correct  amount  of  VAT  will  be 
charged and remitted to the relevant tax authorities.  As VAT is collected upfront at the time 
of sale of IOSS goods, the import process will also be eased as the subsequent import of IOSS 
goods is exempt from import VAT.  
The  initiative  supports  the  EU’s  sustainable  growth  strategy7  that  refers  to  better  tax 
collection, reduction of tax fraud, avoidance and evasion and to the reduction of compliance 
costs for business, individuals, and tax administrations. Improving taxation systems to favour 
more  sustainable  and  fairer  economic  activity  is  also  part  of  the  EU’s  competitive 
sustainability agenda.  

Consistency with other Union policies 

• 
This  initiative is  consistent  with  the Customs Action Plan8.  Management  of e-commerce is 
one of the four key areas of action in the Customs Action Plan. This proposal to extend the 
IOSS scheme by removing the EUR 150 threshold is done in the framework of the customs 
reform. 
In the final report of the Conference on the Future of Europe9, citizens call for ‘Harmonizing 
and  coordinating  tax  policies  within  the  Member  States  of  the  EU  in  order  to  prevent  tax 

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Member  States’  recovery  and  resilience  plans  envisage  a  wide  set  of  reforms  aimed  at  improving  the  business 
environment  and  favouring  adoption  of  digital  and  green  technologies.  These  reforms  are  complemented  by 
important  efforts  to  digitalise  tax  administrations  as  a  strategic  sector  of  the  public  administration.  (Annual 
Sustainable Growth Survey 2022, COM(2021) 740 final. 
Communication  from  the  Commission  to  the  European parliament,  the  Council  and  the European Economic  and 
Social Committee Taking the Customs Union to the Next Level: a Plan for Action, Brussels, COM/2020/581 final.  
Conference  on  the  Future  of  Europe  –  Report  on  the  Final  Outcome,  May  2022,  Proposal  16  (1)-(3).  The 
Conference  on  the  Future  of  Europe  was  held  between  April  2021  and  May  2022.  It  was  a  unique,  citizen-led 
exercise of deliberative democracy at the pan-European level, involving thousands of European citizens as well as 
political actors, social partners, civil society representatives and key stakeholders. 

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evasion and avoidance’, ‘Promoting cooperation between EU Member States to ensure that all 
companies  in  the  EU  pay  their  fair  share  of  taxes’.  This  proposal  is  consistent  with  these 
goals. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

This  Directive  amends  the  VAT  Directive  on  the  basis  of  Article 113  of  the  Treaty  on  the 
Functioning  of  the  European  Union.  That  Article  provides  that  the  Council,  acting 
unanimously  in  accordance  with  a  special  legislative  procedure  and  after  consulting  the 
European  Parliament  and  the  Economic  and  Social  Committee,  can  adopt  provisions  to 
harmonise Member States' rules in the area of indirect taxation. 

• 

Subsidiarity (for non-exclusive competence)  

This  initiative  is  consistent  with  the  principle  of  subsidiarity.  Given  the  need  to  modify  the 
VAT  Directive,  the  objectives  of  this  initiative  cannot  be  achieved  by  the  Member  States 
themselves.  Therefore,  the  Commission,  which  has  responsibility  for  ensuring  the  smooth 
functioning  of  the  single  market  and  for  promoting  the  general  interest  of  the  EU,  needs  to 
propose actions to improve the situation.  

In addition, this proposal aims to make improvments to the functioning of the IOSS, which is 
a simplification tool for the declartion and payment of VAT, which is common to all Member 
States. Therefore, uncoordinated and fragmented national actions would have the potential to 
distort trade. In the targeted consultation10, businesses stated their preference in this regard to 
have VAT rules  applied uniformly  at  EU level,  rather than having  to  comply with  different 
reporting or registration obligations at national level. In terms of VAT collection and control, 
the size of the VAT gap and its persistence clearly demonstrates how national instruments are 
not sufficient to fight VAT fraud. 

• 

Proportionality 

The proposal is consistent with the principle of proportionality and does not go beyond what 
is necessary to meet the objectives of the Treaties, in particular the smooth functioning of the 
single market.  

Proportionality is ensured by the fact that this initiative promotes a more effective and robust 
principle  of  a  single  VAT  registration,  which  does  not  interfere  with  national  VAT 
registration  processes.  Instead,  it  focusses  on  expanding  the  IOSS  scheme  and  deemed 
supplier  regime  to  further  limit  the  instances  in  which  a  trader  who  is  engaging  in  distance 
sales of imported goods  via a markerplace, or in  their own right,   is  required to  register for 
VAT  in  other  Member  States  where  they  are  not  established  and  make  such  supplies  of 
imported goods. 

An  EU-wide  framework  for  handling  VAT  registration  is  proportionate  as  it  will  make  the 
functioning  of  the  single  market  more  sustainable.  Removing  the  need  for  multiple 
registrations within the EU can, by its very nature, only be achieved with a proposal to amend 
the VAT Directive. 

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VAT  in  the  Digital  Age.  Final  Report  (vol.  IV  Consultation  Activities).  Specific  Contract  No 07  implementing 
Framework Contract No TAXUD/2019/CC/150. 

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Choice of the instrument 

The  proposal  requires  amending  Directive  2006/112/EC  on  the  common  system  of  value 
added tax (the 'VAT Directive'). 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Ex-post evaluations/fitness checks of existing legislation 

The  VAT  e-commerce  package  came  into  application  on  1 July  2021  and  introduced  a 
number  of  amendments  to  the  VAT  rules  governing  the  taxation  of  business-to-consumer 
(B2C) cross-border e-commerce activity in the EU.  

The Commission conducted an ex-post evaluation of the first 6 months of application of the  
VAT e-commerce package. The initial results are very encouraging and are testament to the 
success of the new measures. On the import side, the first results hightlight that in the first 6 
months, approximately EUR 2 billion of VAT was collected specifically in relation to imports 
of low value consignments with an intrinsic value not exceeding EUR 150, which equates to 
around EUR 4 billion on an annual basis. Of the EUR 2 billion of VAT that was collected in 
relation  to  imports  of  low  value  goods  in  the  first  6  months,  almost  EUR 1.1 billion  was 
collected via the  IOSS. These figures demonstrate how the  IOSS has  establised itself as the 
key simplification tool for the declaration and payment of VAT on distance sales of imported 
goods.  

The  implementation  of  the  package  has  also  helped  to  counter  VAT  fraud.  Analysis  from 
customs  data  indicates  that  the  top  8  IOSS  registered  traders  accounted  for  approximately 
91%  of  all  transactions  declared  for  import  into  the  EU  via  the  IOSS.  This  is  a  very 
encouraging statistic as it shows the impact the new ‘deeming’ provision for marketplaces has 
had on compliance, to the extent that the follow-up and auditing of this very limited number 
of taxable persons is sufficient to ensure the collection of VAT on this type of transaction.  

This proposal builds on the success of the VAT e-commerce package and the ambition of the 
ViDA proposal, as it envisages the further extension of the deemed supplier regime to cover 
all  distance  sales  of  goods  imported  from  third  territories  or  third  countries,  irrespective  of 
their  value.  As  a  result,  the  compliance  effort  will  be  even  more  focussed  on  a  far  smaller 
number of large players in the market, who will account for the majority of distance sales of 
imported goods into the EU.  

This  initiative  also  supports  the  principle  of  a  single  VAT  registration  in  the  EU  as  it  will 
further  limit  the  instances  in  which  a  taxable  person  will  need  to  register  for  VAT.  The 
extension  of  the  IOSS  simplification  to  cover  all  distance  sales  of  imported  goods, 
irrespective  of  their  value,  along  with  the  extension  of  the  special  arrangements  to  cover 
certain importations of goods in consignments above EUR 150, will further reduce the need 
for  taxable  persons  to  register  for  VAT  in  more  than  one  Member  State.  Also,  as  a 
consequence of the further extension of the deemed supplier regime, taxable persons making 
distance sales of imported goods into the EU via marketplaces will no longer have to register 
for  VAT  in  respect  of  those  supplies  where  the  intrinsic  value  of  the  consignment  is  above 
EUR  150.    Instead,  the  marketplace,  acting  as  deemed  supplier,  will  declare  and  remit  the 
VAT due on those supplies via the expanded IOSS scheme, which will now be mandatory for 
marketplaces under the ViDA proposal.   

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• 

Stakeholder consultations 

The Commission launched an open Public Consultation on 22 January 2022, which remained 
open  until  5  May  2022.  This  public  consultation  was  launched  together  with  a  Call  for 
Evidence. The Public Consultation was structured using a dedicated questionnaire consisting 
of  71  questions.  As  part  of  the  consultation  process,  the  general  public  and  all  key 
stakeholders, including businesses, were invited to submit their views on the three core areas 
addressed  by  the  ViDA  initiative,  namely,  (i)  Digital  Reporting  Requirements  and  e-
invoicing; (ii) the VAT treatment of the platform economy; and (iii) the use of a single VAT 
registration.  In  total,  193  responses  were  received  from  22  Member  States  and  5  non-EU 
countries. Respondents were also permitted to upload position papers. 

A number of respondents to the public consultation expressed the view that the scope of the 
IOSS  should  also  be  broadened  by  removing  the  EUR  150  threshold  to  help  simplify  the 
process  of  declaring  and  remitting  VAT  on  distance  sales  of  imported  goods  above  that 
amount. In turn, the removal of the EUR 150 threshold will decrease the need to register in 
different Member States, which will clearly help businesses, in particular, small and medium 
enterprises (SMEs) to  cope more easily with their VAT obligations and to extend and grow 
their business throughout the EU. 

Over 80% of respondents to the open public consultation considered that difficult compliance 
with VAT registration requirements contributes to high levels of fraud and non-compliance, 
and that taxpayers do not pursue certain markets or transactions as they prefer to avoid VAT 
registration in multiple Member States. 

• 

Collection and use of expertise 

The  Commission  built  on    the  analysis  carried  out  by  an  external  contractor  for  the  study 
‘VAT in the Digital Age’11.   

The  study’s  aim  was  first  to  evaluate  the  current  situation  with  regard  to  digital  reporting 
requirements, the VAT treatment of the platform economy, and a single VAT registration and 
IOSS. Secondly, to assess the impacts of a number of possible policy initiatives in these areas. 
That study specifically examined the option to remove the EUR 150 threshold that applies to 
the  IOSS.  The  study  noted  that  distances  sales  of  imported  goods  above  EUR  150  and 
distance sales of goods subject to excise duties are transactions that are prevalent in particular 
in e-commerce. Distance sales from third countries/territories of goods worth more than EUR 
150  and  goods  subject  to  excise  duties  imported  from  third  countries/territories  make  up 
around 10-20% of the total value of e-commerce distance sales into the EU, as suggested by 
the targeted consultation.  

Moreover, the Commission used the analysis carried out by another external contractor in the 
framework of the study on “An integrated and innovative overhaul of EU rules governing e-
commerce transactions from third countries from a customs and taxation perspective”  12. The 
study follows up action 9 of the Customs Action Plan whereby the Commission endeavoured 
to  examine  the  effects  of  e-commerce  on  customs  duty  collection  and  on  the  level  playing 
field  for  EU  operators,  including  possible  arrangements  for  customs  duty  collection  on  the 
lines  of  the  new  VAT  collection  approach  under  the  IOSS.  The  study  assessed  the  possible 
implications of changing the EUR 150 duty relief threshold and concluded that the removal of 
such threshold would result in the largest revenue increase, and would level the playing field 
between foreign sellers and the domestic market to the greatest extent. It would also remove 

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The evaluation of the second version of the final report is still ongoing at the time of the proposal. 

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fraud  or  evasion  of  customs  duty  payment  resulting  from  the  splitting  of  consignments  and 
reduce the incentive for undervaluation.  

• 

Impact assessment 

Examined  by  the  Regulatory  Scrutiny  Board  on  22 June  2022,  the  impact  assessment  for 
ViDA proposal obtained a positive opinion. The Board recommended more detail be added, to 
better  describe  the  methodologies  used  for  modelling  and  to  further  clarify  the  options. 
Accordingly,  the  impact  assessment  was  amended  to  include  Member  State  and  sectoral 
perspectives  on  the  platform  economy,  the  econometric  analysis/techniques  used  for 
modelling  were  comprehensively  described  and  the  structure  of  the  DRRs  linked  to  the 
options was detailed.  

Several  policy  options  were  analysed  in  the  impact  assessment  accompanying  the  ViDA 
proposal.  For  VAT  registration,  the  impact  assessment  examined  three  particular  policy 
options, including sub-options, specifically in relation to the use and scope of the IOSS. The 
three  IOSS related policy  options focussed on maintaining the status  quo, making the  IOSS 
mandatory for different  suppliers (with/without a certain limit) and the removal of the EUR 
150  threshold  for  the  use  of  the  IOSS.  These  three  IOSS  related  options  were  grouped  into 
broader  policy  approaches,  along  with  other  policy  options  centred  on  Digital  Report 
Requirements  (DRR),  the  platform  economy  and  other  initiatives  to  minimise  VAT 
registrations under the umbrella objective of a single VAT registration in the EU.    In total, 
there  were  five  broader  policy  approaches  included  in  the  impact  assessment,  two  of  which 
included changes to the IOSS, namely, the ‘enhanced approach’ and the ‘maximal approach’. 
The  former  approach  included  the  option  the  make  the  IOSS  mandatory,  while  the  latter 
approach  included  both  the  option  to  make  the  IOSS  mandatory,  along  with  the  option  to 
remove the EUR 150 threshold for the use of the IOSS. 

The impact assessment highlighted the importance of addressing the VAT framework for the 
administration and collection of VAT on distance sales of imported goods.  In fact, in 2020, 
across  the  EU-27,  distance  sales  of  imported  goods  were  estimated  to  amount  to  EUR  29 
billion. Furthermore, stakeholders indicated that a significant proportion  of distance sales of 
imported  goods  –  indicatively  around  10-20%  –  exceeded  EUR  150  and  are,  therefore, 
currently ineligible for the IOSS. The option to remove the EUR 150 threshold would allow 
the  use  of  the  IOSS  for  higher-value  goods,  making  it  potentially  more  useful  for  distance 
sellers of imported goods of which at least some of their distance sales of imported goods are 
valued  at  more  than  the  current  threshold.  The  impact  assessment  acknowledges  that  the 
removal  of  the  EUR  150  threshold  would  result  in  a  reduction  of  the  administrative  burden 
and  costs  associcated  with  VAT  registration  for  businesses  as  some  businesses  would  no 
longer be required to register in the Member State of destination, thus reducing their burdens. 

Both  the  maximal  and  enhanced  approaches  were  seen  to  have  a  wide  coverage,  hence  the 
greatest potential benefits. For example, in the VAT registration area where the focus is more 
on the issue of high administrative and compliance costs, the sub-options for OSS and IOSS 
mainly  differ  in  terms  of  the  scope  of  the  situations  currently  triggering  multiple  VAT 
registrations that would be addressed. 

Ultimately,  the  analysis  included  in  the  impact  assessment  revealed  that  best  balance 
regarding the policy options in terms of effectiveness, proportionality and subsidiarity would 
be achieved by implementing the ‘enhanced approach’. The enhanced approach combines the 
introduction  of  DRRs  at  EU  level,  a  ‘deemed  supplier’  provision  for  the  short-term 
accommodation  rental  and  passenger  transport  sectors  and  a  combination  of  broader  OSS 
extension, reverse charge and a mandatory IOSS for platforms. 

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The ‘maximal approach’ proposed the removal of the 150 EUR threshold, however, due to its 
strong  links  to  the  calculation  of  the  customs  duty,  it  was  not  considered  to  be  the  most 
effective option in the context of the ViDA proposal. The impact assessment recognises that 
the expansion of the  IOSS to include distance sales of imported goods exceeding EUR 150, 
represents  an  improvement  that  is  supported  by  businesses.  Therefore,  the  removal  of  the 
EUR  150  threshold  is  addressed  in  this  proposal  in  conjunction  with  the  comprehensive 
revision of the respective customs rules. 

Between 2023 and 2032 it is expected that EUR 8.7 billion in savings will be achieved from 
removing  VAT  registration  obligations.  Environmental,  social  and  business  automation 
benefits,  as  well  as  benefits  related  to  the  functioning  of  the  Internal  Market  (more  level-
playing field) and tax control efficiency are also expected.  

The impact  assessment  and its annexes, the executive summary  and the  Board’s opinion on 
the  impact  assessment  are  available  at  the  consultation’s  page  on  “Have  your  say”  portal: 
https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13186-VAT-in-the-
digital-age_en.   

The impact assessment report on the Customs Union reform also identified undervaluation as 
an  issue.  When  undervalued,  goods  are  declared  below  their  correct  customs  value  and, 
consequently, the basis on which customs duties and VAT is applied is lower. Undervaluation 
is considered more relevant in the categories of goods where duties apply. However, a study 
conducted by Copenhagen Economics in 2016 estimated that about 65% of the e-commerce 
consignments are undervalued for VAT purposes, regardless of the duty exemption.13 There 
have also been cases of systematic undervaluation of certain categories of goods, resulting in 
important revenue losses in customs duties. 14  

• 

Regulatory fitness and simplification 

This  proposal  builds  on  the  ViDA  proposal,  which  is  a  REFIT  initiative  to  modernise  the 
current VAT rules and take account of the opportunities offered by digital technologies15. The 
proposal is expected to enhance the single market and help improve tax collection on distance 
sales of imported goods. This proposal will therefore ensure sustainable revenues during the 
recovery from the COVID-19 pandemic. 

The expectation is that companies engaged in distance sales of imported goods will see a net 
benefit from the introduction of the proposal. Overall, this proposal will further enhance the 
concept of a single VAT registration (SVR), which will support the ‘one in, one out’ principle 
or  even  go  further  to  ‘one  in,  multiple  out’,  taking  account  of  the  multiple  registration 
obligations that can exist in respect of distance sales of imported goods above EUR 150.   

This proposal builds on the principle of a single VAT registration in the EU and is expected to 
further reduce the need for multiple registrations in other Member States. It will therefore help 
to  reduce  the  administrative  burden  and  related  costs  for  businesses  involved  in  making 
distance sales of imported goods above EUR 150. 

The Fit for Future Platform included the VAT in the Digital Age initiative in its annual work 
programme  for  2022,  recognising  its  potential  for  reducing  the  administrative  burden  in  the 

13 
14 

15 

Copenhagen Economics (2016) E-commerce imports into Europe: VAT and Customs treatment. 
The largest of  OLAF’s investigations concerned imports through the UK between 2013 and 2016. See European 
Court of Justice Case C-213/19 European Commission v United Kingdom of Great Britain and Northern Ireland. 
2022 Commission Work Programme, Annex II: REFIT initiatives, sub-section "An economy that works for people" 
(No 20). 

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policy  field16.  This  current  proposal  also  builds  on  the  ViDA’s  core  objectives  by  further 
reducing the admistrative burdens and costs associated with VAT compliance.  

4. 

BUDGETARY IMPLICATIONS 

This proposal is expected to increase VAT revenues for Member States as it will improve the 
collection  of  VAT  by  focussing  the  compliance  effort  on  a  smaller  number  of  largely 
compliant taxable persons. The expansion of the IOSS scheme to cover all distance sales of 
imported goods, with the exception of products subject to excise duty, will help to reduce the 
administrative  burden  and  costs  associated  with  issuing  and  controlling  VAT  registrations. 
With  the  expansion  of  the  deemed  supplier  rule,  IOSS  and  special  arrangements,  tax 
administrations  should  experience  a  corresponding  decrease  in  the  number  of  registration 
requests  made  by  non-established  taxable  persons.  Therefore,  for  Member  States,  this 
proposal  will  reduce  the  administration  costs  associated  with  registering  traders  who  make 
disance sales of goods imported into the EU above EUR 150 as such traders will now be able 
to declare and remit the VAT due on those supplies via the IOSS scheme, negating to need to 
register for VAT in respect of those supplies in multiple Member States. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The VAT Committee, an advisory committee on VAT issues in which representatives of all 
Member States participate and which is chaired by Commission officials from the Directorate 
General  Taxation  and  Customs  Union  (DG  TAXUD),  will  discuss  and  clarify  possible 
interpretation issues between Member States regarding the new legislation. 

The  Standing  Committee  on  Administrative  Cooperation  (SCAC)  will  deal  with  possible 
issues regarding administrative co-operation between Member States resulting from the new 
provisions covered by this proposal. 

In addition,  the Commission  will monitor and evaluate whether this initiative is  functioning 
properly in terms of achieving its objectives. 

• 

Detailed explanation of the specific provisions of the proposal 

This proposal includes three main elements. First, it is proposed to extend the application of 
the deemed supplier rule, which is currently limited to distance sales of imported goods not 
exceeding  EUR  150,  to  cover  all  distance  sales  of  goods  imported  from  a  third  territory  or 
third  country.  This  extension  of  the  deemed  supplier  rule  is  achieved  by  removing  the 
reference  to  the  EUR  150  threshold  in  paragraph  1  of  Article  14a  of  Council  Directive 
2006/112/EC.  Under its expanded scope, the deemed supplier rule would therefore apply to 
all distance sales of imported goods into the EU that are facilitated by an electronic interface, 
irrespective of the intrinsic value of the consignment. 

Second,  it  is  proposed  to  extend  the  application  of  the  IOSS,  which  is  currently  limited  to 
distance  sales  of  imported  goods  in  consignments  of  an  intrinsic  value  not  exceeding  EUR 
150,  to  cover  all  distance  sales  of  imported  goods,  irrespective  of  their  value.  However, 
products subject to excise duty would remain excluded from the scheme. The extension of the 

16 

2022_annual_work_programme_-_fit_for_future_platform_en.pdf (europa.eu) 

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IOSS  would  help  to  advance  the  concept  of  a  single  VAT  registration  in  the  EU  by  further 
limiting  the  instances  in  which  a  taxable  person  is  required  to  register  for  VAT  in  another 
Member  State.  This  extension  of  the  application  of  the  IOSS  is  achieved  by  removing  the 
reference to the EUR 150 threshold in the first paragraph of Article 369l of Council Directive 
2006/112/EC. 

Third,  the  proposal  would  extend  the  application  of  the  special  arrangements  set  out  in 
Chapter  7  of  Title  XII  of  Council  Directive  2006/112/EC,  which  is  currently  limited  to 
eligible  imported  goods  of  an  intrinsic  value  not  exceeding  EUR  150,  to  cover  all  eligible 
goods. Products subject to excise duty would remain excluded from these arrangements. The 
extension  of  the  special  arrangements  will  help  to  advance  the  concept  of  a  single  VAT 
registration in the EU by further limiting the instances in which a taxable person is required to 
register for VAT in another Member State. Article 369y of Council Directive 2006/112/EC is 
therefore amended to remove the reference to the EUR 150 threshold. 

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2023/0158 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

amending Directive 2006/112/EC as regards VAT rules relating to taxable persons who 
facilitate distance sales of imported goods and the application of the special scheme for 
distance sales of goods imported from third territories or third countries and special 
arrangements for declaration and payment of import VAT 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 113 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Parliament1,  
Having regard to the opinion of the European Economic and Social Committee2, 

Acting in accordance with a special legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

Article  14a(1)  of  Council  Directive  2006/112/EC3  provides  for  the  ‘deemed  supplier 
regime’. Pursuant to that Article, where a taxable person facilitates, through the use of 
an electronic interface, distance sales of imported goods from  third territories or third 
countries, that taxable person is to be the deemed supplier of those goods.  

The application of the ‘deemed supplier’ regime is currently limited to distance sales 
of  goods  imported  from  third  territories  or  third  countries  in  consignments  of  an 
intrinsic value not exceeding EUR 150. To reduce the compliance burden for traders 
selling  via  electronic  interfaces,  such  as  marketplaces,  and  to  support  a  single  value 
added  tax  (VAT)  registration  in  the  Union,  the  EUR  150  limit  should  be  deleted. 
Consequently,  the  deemed  supplier  regime  should  cover  all  distance  sales  of  goods 
imported  from  third  territories  or  third  countries  into  the  Union, irrespective  of  their 
value.  

Title XII, Chapter 6, Section 4,  of Directive 2006/112/EC sets down a special scheme 
for distance sales of goods imported from third territories or third countries known as 
the Import One-Stop Shop (IOSS). Taxable persons who opt to register for the IOSS 
do not need to register for VAT in each Member State in which their eligible supplies 
of  goods  to  consumers  take  place.  Instead,  the  VAT  due  on  those  supplies  can  be 
declared and paid in a single Member State via the IOSS scheme. However, the IOSS 
special scheme is limited to distance sales of imported goods in consignments with an 

1 
2 
3 

OJ C , , p. . 
OJ C , , p. . 
Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ L 
347, 11.12.2006, p. 1). 

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(4) 

(5) 

(6) 

intrinsic  value  not  exceeding  EUR  150.  To  support  a  single  VAT  registration  in  the 
Union, the threshold of EUR 150 should be deleted so that taxable persons who make 
distance  sales  of    goods  imported  from  third  territories  or  third  countries  into  the 
Union exceeding EUR 150 are not obliged to register for import VAT in each Member 
State of destination of the goods.  

Title XII, Chapter 7, of Directive 2006/112/EC sets down the special arrangements for 
the  declaration  and  payment  of  import  VAT.  When  certain  conditions  are  met,  the 
special arrangements allow postal operators, express carriers, customs agents and other 
operators  who  fulfil  the  customs  import  declarations  on  behalf  of  the  customer  to 
declare  and  remit  the  VAT  collected  on  certain  imports  on  a  monthly  basis.  The 
special  arrangements  are  limited  to  imported  goods  in  consignments  of  an  intrinsic 
value not exceeding EUR 150, excluding products subject to excise duty. Therefore, to 
reduce  the  compliance  burden  and  costs  associated  with  imported  goods  in 
consignments of an intrinsic value above EUR 150, the threshold of EUR 150 should 
be deleted.  

In accordance with  the Joint Political  Declaration of 28 September 2011 of Member 
States  and  the  Commission  on  explanatory  documents4,  Member  States  have 
undertaken  to  accompany,  in  justified  cases,  the  notification  of  their  transposition 
measures  with  one  or  more  documents  explaining  the  relationship  between  the 
components  of  a  directive  and  the  corresponding  parts  of  national  transposition 
instruments. With regard to this Directive, the legislator considers the transmission of 
such documents to be justified. 

Since the objective of this Directive, namely to advance the concept of a single VAT 
registration in the  Union, can only be  achieved at Union level, the Union may adopt 
measures, in accordance with the principle of subsidiarity as set out in Article 5 of the 
Treaty on European Union. In accordance with the principle of proportionality as set 
out  in  that  Article,  this  Directive  does  not  go  beyond  what  is  necessary  in  order  to 
achieve those objectives. 

(7) 

Directive 2006/112/EC should therefore be amended accordingly, 

HAS ADOPTED THIS DIRECTIVE: 

Article 1 

Amendments to Directive 2006/112/EC  

Directive 2006/112/EC is amended as follows: 

(1) 

in Article 14a, paragraph 1 is replaced by the following: 

‘1.  Where  a  taxable  person  facilitates,  through  the  use  of  an  electronic  interface 
such  as  a  marketplace,  platform,  portal  or  similar  means,  distance  sales  of  goods 
imported from third territories or third countries, that taxable person shall be deemed 
to have received and supplied those goods himself.’; 

(2) 

in Article 369l, the first paragraph is replaced by the following: 

‘For  the  purposes  of  this  Section,  distance  sales  of  goods  imported  from  third 
territories or third countries shall not include products subject to excise duty.’; 

4 

OJ C 369, 17.12.2011, p. 14. 

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(3) 

Article 369y is replaced by the following: 

‘Article 369y 

Where,  for  the  importation  of  goods,  except  products  subject  to  excise  duties,  the 
special  scheme  in  Section  4  of  Chapter  6  is  not  used,  the  Member  State  of 
importation shall permit the person presenting the goods to customs on behalf of the 
person  for  whom  the  goods  are  destined  within  the  territory  of  the  Community  to 
make  use  of  special  arrangements  for  declaration  and  payment  of  import  VAT  in 
respect of goods for which the dispatch or transport ends in that Member State.’. 

Article 2 

Transposition 

1. 

Member States shall adopt and publish, by 31 December 2027 at the latest, the laws, 
regulations  and  administrative  provisions  necessary  to  comply  with  this  Directive. 
They shall forthwith communicate to the Commission the text of those provisions. 

They shall apply those provisions from 1 March 2028. 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference is to be made. 

2. 

Member States shall communicate to the Commission the text of the main provisions 
of national law which they adopt in the field covered by this Directive. 

Article 3 

Entry into force 

This Directive shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

Article 4 

Addressees 

This Directive is addressed to the Member States. 

Done at Brussels, 

For the Council 
The President 

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