Will the VAT rules for e-commerce 2021 be possible to understand and use for electronic marketplaces and other intermediaries?

There are few people that fully understand and can handle the whole VAT system. My expectations were therefore that simplification would be the guiding principle for the future VAT rules. However, after trying to fully understand the Swedish implementation of the EU e-commerce package that will be in force on July 1, 2021, I feel discouraged. Among other things, the package entails:

• VAT exemption on low consignment goods (22 Euro) is abolished,

• electronic marketplaces (e.g. platforms) in some cases are deemed to have received and supplied the relevant goods themselves,

• the special scheme MOSS is extended to include all services and certain goods and

• current thresholds on distance sales of goods is abolished and is replaced with an EU common threshold.

The complexity of the Swedish legislation is unprecedented (see draft legislation). The rules are both difficult to understand and severely hard to overlook, leading to many unanswered questions regarding their application. The Swedish Confederation of Enterprise, together with Grant Thornton, have compiled an overview of issues which we have encountered so far in proposed legislation. A compilation, see attached document, has been sent to the Swedish Tax Agency and the Swedish Customs.

Authorities need to give their point of view on all these unanswered questions, not least in respect of which taxable persons the rules will cover. Previously, we have pointed to the central but unclear concept of intermediation (see letter and mapping made by PwC). Neither the legislator nor the “VAT inquiry” (Fi 2016:06, SOU 2020:31) has addressed the 13 different definitions of intermediation in the Swedish VAT act. It remains for the Swedish Tax Agency to clarify when the Agency considers that someone act in their own or someone else’s name, when trading in Sweden and within EU. Furthermore, it must also be clarified whether this assessment is affected by the 2021 rules, since electronic marketplaces can become taxable when facilitating third country sales through an electronic interface.

Modifications in companies IT-systems and VAT routines do not happen automatically. It is a rather long and costly process. This is particularly problematic during the current pandemic when many companies have been forced to lay off employees and need to focus their resources on maintaining their existence.