Are ‘reverse charging’ and the ‘one-stop-scheme’ efficient ways to collect VAT on digital supplies?

Abstract

With regard to the collection of VAT on electronically supplied services, the EU VAT Directive provides for reverse charging (in B2B) and a single registration scheme (in B2C). This paper challenges the efficiency of these collection mechanisms in a digital context, and in particular their practicability for suppliers (acting as tax collectors). It also discusses whether they are in compliance with the 1998 OECD recommendations on e-commerce. After noting the current (non-)developments in the context of the European Commission's ambition to reform the EU VAT system and achieve a Digital Single Market by 2020, it sketches three proposals for further discussion.