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The ECA will examine the EC’s regulatory and control framework for e-commerce and cooperation between Member States to ensure that VAT and customs duties on e-commerce transactions are collected in full. The ECA has published a Background Paper on the collection of VAT and customs duties on e-commerce as a source of information for those interested in the subject.
The European Union encourages e-commerce to ensure that businesses and consumers can buy and sell internationally on the internet just as they do in their local markets. However, e-commerce is still susceptible to irregularities concerning VAT and customs duties. This directly affects Member States’ budgets and indirectly affects the EU budget since it reduces Member States’ customs duties and VAT-based contributions. The European Commission estimates overall VAT losses in cross-border e-commerce resulting from the exemption of low-value consignments to be as high as €5 billion per year.
“Up to now, the collection of VAT and customs duties in cross-border e-commerce has been prone to irregularities. In particular, the current arrangements are open to abuse by suppliers from outside the EU. This puts EU traders at a severe disadvantage and leads to lost revenue for the EU,” said Ildikó Gáll-Pelcz, the Member of the ECA responsible for the audit.