Mon, Oct
46 New Articles

European Parliament Backs Measures to Combat VAT Fraud Related to E-commerce

European Parliament Backs Measures to Combat VAT Fraud Related to E-commerce

  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

Online sales in the EU are estimated to worth €550 billion a year – €96 billion of which is cross-border. The new EU VAT system for e-commerce aims to give simpler value added tax (VAT) rules and administration for businesses and measures for Member States to tackle VAT fraud related to e-commerce.

The new framework introduced the destination principle for cross-border business-to-consumer (B2C) sales; i.e. VAT is to be paid at the rate of the country of consumption as of January 2021. The regime is expected to raise €7 billion in VAT revenues for Member States and drop in VAT compliance costs of €2.3 billion a year for businesses from next year. Identification of the online businesses supplying goods and services to customers in other Member States, however, is going to be key when it comes to ensuring effective collection of VAT and addressing e-commerce VAT fraud.

The European Parliament supported measures on 17 December 2019 designed to fight e-commerce VAT evasion that would help close some of the €137 billion VAT gap each year across the EU due to (inter alia) VAT fraud. E-commerce payments in most cases involve intermediaries (payment service providers (PSPs). Accordingly, the first proposal would oblige PSPs to collect and retain cross-border e-commerce payment records for three years. The second proposal includes several measures to improve administrative cooperation, information sharing between the parties and effective prosecution supported by the European Public Prosecutor's Office.

Now, it is up to the EU Member State ministers to adopt the two pieces of legislation.

By Balint Zsoldos, Head of Tax, KCG Partners Law Firm

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

The firm advises a broad range of clients, including numerous multinational corporations. 

Our activity focuses on the following practice areas: M&A, company law, litigation and dispute resolution, real estate law, banking and finance, project financing, insolvency and restructuring, venture capital investment, taxation, competition, utilities, energy, media and telecommunication.

Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi – the world’s leading network of independent law firms with in-depth experience in 100+countries worldwide.

The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

Firm's website.

Our Latest Issue