Study on EU VAT reform: Still no relief in sight for retailers

Fatih-Kağan Taşkoparan

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- Since the EU VAT reform came into force, the technical changeover has proved (very or somewhat) problematic for 71% of companies (cf. 63% in 2022).
- 73 percent of the online retailers surveyed estimate that their tax reporting obligations are more burdensome than before the changeover.
- Nine percent of companies use the services of digital tax advisors.

The new EU VAT reform came into force in Germany in June 2021. The introduction of measures such as an EU-wide delivery threshold, the fight against VAT fraud and the minimization of potential distortions of competition at international level are intended to simplify existing processes for companies. However, even in the second year, it is clear that the majority of retailers perceive the regulations as an obstacle. For 71% of companies, the technical changeover was (very or somewhat) problematic. Last year, only 63 percent stated this. This is confirmed by the second fynax study on tax challenges in online retail, which was published in cooperation with Händlerbund Management AG, the largest online retail association in Europe. Almost 400 online retailers were surveyed for the study between May 29 and August 2, 2023.

"Although 69% of retailers stated that they have a high level of tax knowledge, this is not reflected in the relief in their day-to-day business," says fynax head and tax consultant Nadja Müller, not surprised. Before the reform, country-specific delivery thresholds applied, which have now been abolished by the EU regulation. Although the knowledge of cross-border relocation of goods has grown significantly among traders and around 94% are familiar with the tax requirements of the countries in which goods are stored, the complexity of the requirements is still eminent. For the vast majority (62%) of respondents, paying tax in other EU countries is a challenging task and around 73% estimate that their tax reporting obligations are more burdensome than before the changeover.