E-Commerce merchants could pay up to EUR 3.8 billion too much VAT in 2022

• Merchants underestimate losses due to VAT exceptions
• Online tool "VAT Optimiser" warns of possible VAT overpayment

Berlin, 16 February 2022 - VAT rates vary across the EU. In addition to the country-specific standard rates (from 17% in Luxembourg to 27% in Hungary), Member States can apply reduced (from 5 to 15%) or super-reduced rates (below 5%). Some EU countries also apply a zero rate to specific transactions. It is up to each Member State to decide which rate to apply to a product. In early December, the EU's Economic and Financial Affairs Council, ECOFIN, also voted in favour of new freedoms for Member States to apply reduced VAT rates.

MERCHANTS UNDERESTIMATE LOSSES DUE TO VAT EXCEPTIONS

Many e-commerce merchants nevertheless rely on uniform product prices for consumers across countries. However, they underestimate the losses that occur when local reductions and exceptions are not considered in tax reporting. Instead, the standard rate is passed on to the tax authorities. A difference that the company could add to its margin.

If VAT exceptions are not taken into account, EU e-commerce would be hit with an overpayment of EUR 3.8 billion in 2022, according to an estimate by the Berlin-based tax technology specialist eClear. The calculation is based on a forecast as of 14 February 2022 by Statista Global Consumer Survey expecting an e-commerce turnover of EUR 388.371 for the EU-27 in 2022. eClear aggregates and continuously updates all tax rates and rules relevant for online merchants in its VATRules database.

eClear's VAT OPTIMISER WARNS OF POSSIBLE VAT OVERPAYMENT

Companies that count the effort of an EU-wide tax rate determination with continuous updating to be higher than its advantages can now check if their product groups are affected by reductions and exceptions in other EU countries.

For a quick calculation, enter the revenue by country into the VAT Optimiser developed by eClear and weigh the product groups proportionally. In a few seconds, the VAT optimisation potential is shown in Euro. Anyone interested in a breakdown by country and product group can request this information by e-mail. The service is free of charge.

According to VAT Optimiser, an online store that turns over 980,000 EUR in the Netherlands and 750,000 EUR in Belgium in the Home & Garden product group could improve its result by a good 36,000 EUR. The result (VAT optimisation potential) points out the difference between the general application of standard VAT rates and the application of the VAT rates actually required depending on the product class; the latter then considers all current exemption rules and reductions.

You can use eClear's VAT Optimiser online for free: https://eclear.com/vat-optimiser

eClear AG
Französische Straße 56
10117 Berlin
comms@eclear.com

eClear AG is Europe's only payment service for tax clearing in cross-border e-commerce. With its full-service solution "ClearVAT", the leading tax technology company takes over the complete processing of VAT obligations from cross-border B2C trade transactions. The cloud-based eClear solutions automate and significantly simplify all VAT, customs and payment processes in e-commerce trade. The company was founded in 2016 by Roman Maria Koidl. The supervisory board of eClear AG includes Peer Steinbrück, Thomas Ebeling and Dr Gerhard Cromme. In May 2021, eClear received the BaFin authorisation as an acquirer, which allows the company to operate as a payment service for cross-border e-commerce trade throughout the EU. eClear AG's processes are certified under Auditing Standard 880 of the Institute of German Certified Public Accountants. Further information can be found at https://eclear.com.