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UK challenges EU e-commerce VAT

  • EU VAT
  • 16 November 2016 | Richard Asquith

UK challenges EU e-commerce VAT

A UK VAT case is making progress towards potentially relieving some e-commerce sellers of their foreign VAT registration and returns burden.

Separating online selling from the delivery service eliminates foreign VAT registrations?

The appeal case is being brought by Sports Direct, a UK high-street and online retailer, to the UK’s First-Tier Tax Tribunal shortly. It concerns e-commerce sellers and their obligation to non-resident VAT register, and charge local VAT, in the EU countries where they are selling B2C. Sports Direct is seeking to separate its online selling from the service of delivery of the goods – which Sports Direct would pass to outside delivery companies. Sports Direct believes separating the delivery element means they are not required to charge foreign VAT – they would just charge UK VAT to their EU customers.   This would mean Sports Direct – and similar e-commerce sellers – would not need multiple EU VAT numbers.

EU rules artificial separation not adequate

In 2015, the EU’s VAT Committee looked to close such loopholes when it published a report on similar schemes. Its guidance confirmed that delivery separation schemes were artificial for the purposes of avoiding foreign VAT compliance obligations.

Sports Direct may have to take its case to the European Court of Justice to seek to overturn this interpretation.

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.