European Union: Council of the European Union reached agreement on Draft Directive amending Directive 2006/112/EC regarding VAT rules for distance sales of imported goods and import VAT

On 13 May 2025, the Council of the European Union agreed its position (general approach) on a draft directive amending Council Directive 2006/112/EC concerning value added tax (VAT) rules for distance sales of imported goods and the collection of import VAT. The draft directive seeks to improve VAT collection on low-value imports by shifting the liability for VAT on importation and distance sales to suppliers, thereby incentivising the use of the Import One-Stop Shop (IOSS). Under the agreed text, non-EU traders or platforms facilitating distance sales of imported goods would be liable for import VAT and VAT in the Member State of destination if they do not use the IOSS. Such traders must designate a tax representative unless they are established in a third country with a mutual assistance agreement. Member States may also impose joint and several liability for import VAT on indirect customs representatives and other parties involved in the import process. To mitigate the impact of non-compliance by suppliers, Member States may allow customers to pay import VAT in certain cases, subject to conditions. The special arrangements in Chapter 7 of Title XII of Directive 2006/112/EC, which previously made customers liable for import VAT, are to be repealed. The directive is subject to a special legislative procedure and requires consultation with the European Parliament before formal adoption by the Council.