Kaupan liitto ry - Finnish Commerce Federation

…1 (3) 4 April 2023 Finnish Commerce Federation • Eteläranta 10, P.O. Box 340, FI-00131 Helsinki • t. +358 9 172 850 • Business ID 1957903-2 www.kauppa.fi • [email protected] FINNISH COMMERCE FEDERATION – VAT IN THE DIGITAL AGE Finnish Commerce Federation is a nationwide lobbying organisation whose mission is to promote Finnish commerce. We work to improve the operating conditions for companies active in wholesale and retail trade, to stimulate co-operation within the sector and to enhance the commercial and employer interests of our members. We play an important role in the labour market, negotiating collective labour agreements, resolving labour disputes and serving our members in employment issues. Our aim is to increase further the scope and relevance our member services. Commerce employs around 300,000 people in Finland.

…is to increase further the scope and relevance our member services. Commerce employs around 300,000 people in Finland. There are around 7,000 member companies in the scope of Finnish Commerce Federation. Future of VAT reporting and e-invoices DRR in general Finnish Commerce Federation strongly supports measures to combat tax fraud and actions to address non-compliance. Any measures designed to reduce VAT fraud must be designed in such a way that they work in harmony with the existing commercial landscape, thereby causing minimal business disruption. For this reason, Finnish Commerce Federation considers the Commission’s proposal regarding DRR to be overscaled. Instead of proposing compulsory DRR measures the Commission should concentrate on helping SMEs to start using standardized e-invoices.

DRR measures the Commission should concentrate on helping SMEs to start using standardized e-invoices. According to Finnish Real-Time Economy project, which is set up by the Ministry of Economic Affairs and Employment of Finland, approximately 50-60 % of Finnish companies use e- invoices. This means that Finland is among top countries in EU in the use of standardized e- invoices. Especially large and medium sized companies use e-invoices in Finland. The price tag for companies for introducing DRRs, new VAT reporting requirements and compulsory e-invoices is extremely high. These measures require companies to modify their ERPs which is never easy or cheap. High cost affects especially to micro sized companies and SMEs. At the worst these companies need to postpone their strategic investments in order to build their ERPs to comply with the DRRs and e-invoices.

…need to postpone their strategic investments in order to build their ERPs to comply with the DRRs and e-invoices. That is why, if the Commission proceeds with the DRR, the timetable for amendments is too tight and should be expanded to mid 2030’s. The Commission should first concentrate on actions that improve the utilization rate of e-invoices among micro and small sized companies. Finnish Commerce Federation emphasizes that the Commission should not leave measures on how to help micro and small sized companies to implement e-invoices only to member states’ decisions. Ref.

…measures on how to help micro and small sized companies to implement e-invoices only to member states’ decisions. Ref. Ares(2023)2427865 - 04/04/2023 2 (3) 4 April 2023 The deadline for the transmission of the data According to Article 263 of the proposal the information has to be transmitted on a transaction-by-transaction basis, the deadline for the transmission of the data is two working days after the issuance of the invoice, or after the date the invoice should have been issued in case the taxable person has not complied with their obligation to issue an invoice, the transmission of the data has to be carried out electronically, and Member States will provide the means for that transmission. The Finnish Commerce Federation stresses that the timeframe for transmission is way too short. It most probably will cause problems especially for the purchasers.

…the timeframe for transmission is way too short. It most probably will cause problems especially for the purchasers. The acceptance procedure of the invoice, whether it is in paper or electronic form, takes long time in companies. Usually, companies are not able to automatize acceptance procedure since it needs information that is not possible to include to the invoices, such as deductibility of the invoice. Option to expand DRR to domestic transactions According to proposal’s Article 271a Member States have option to put in place within their territory digital reporting systems for instance, the reporting of supplies of goods or services carried out by a taxable person to a private individual. Such a system will have to comply with the features laid down in Article 271b.

…taxable person to a private individual. Such a system will have to comply with the features laid down in Article 271b. Furthermore, according to Article 271b electronic invoices must comply with the European standard on electronic invoicing and the list of its syntaxes pursuant to Directive 2014/55/EU. Finnish Commerce Federation points out that electronic invoices do not apply to supplies of good or services to private individuals. These transactions are covered by e-recipes which have completely different standards. According to our understanding e-recipes currently do not have European standards. Thus, The Commission should abolish the Member States’ option to expand DRR to B2C transactions. Summary invoices According to the proposal the possibility to issue summary invoices would be eliminated.

…transactions. Summary invoices According to the proposal the possibility to issue summary invoices would be eliminated. This is problematic for companies since it is reasonable to collect some of the transactions together and only issue one summary invoice instead of multiple separate invoices. Good example is phone call information, it would be inconvenient to invoice each phone call separately. For that reason, mobile operators send their customers summary invoice which include all the phone calls from the specific timeperiod. Also inside group of companies it is reasonable to issue summary invoices for transactions between mother and daughter companies. Finnish Commerce Federation stresses that elimination of summary invoices would increase expenses related to invoicing.

Finnish Commerce Federation stresses that elimination of summary invoices would increase expenses related to invoicing. 3 (3) 4 April 2023 IBAN number According to the proposal subparagraph 17 of the Article 226(1) requires reporting of the IBAN number of the bank account to which the payment of the invoice is made or another identifier that can be unambiguously linked to the bank account on a transaction-by-transaction basis. Finnish Commerce Federation stresses that there are payment solutions that are not linked to IBAN number. It would also stop the development of new payment solutions that are not tied to bank account if IBAN number would be mandatory information in respect of DRR. EU Single VAT ID The Finnish Commerce Federation welcomes the Commission's proposal to expand the OSS to cover situations where a company transfers its own goods between EU member states.

…proposal to expand the OSS to cover situations where a company transfers its own goods between EU member states. This expansion particularly eases the registration burden for businesses with stocks in multiple EU countries. However, the possibility to use the extended OSS should be available on a country-by-country basis, allowing companies to choose where to use the system. If the system is required to be used in all countries where the company operates, or alternatively not used at all, the benefits of the system are limited. The Finnish Commerce Federation notes that the Commission's directive proposal does not include a change to the VAT deduction procedure for companies using the OSS system. Under current conditions, companies using the OSS system cannot claim VAT refunds for the value-added tax included in purchases made in another EU member state through the system.

…claim VAT refunds for the value-added tax included in purchases made in another EU member state through the system. Instead, companies must apply for refunds through a slow and administratively cumbersome VAT refund process. Finnish Commerce Federation supports the measure to make the existing Import One Stop Shop mandatory for marketplaces acting as deemed supplier, as this will improve the collection and simplify the audit and enforcement of VAT, while ensuring a level playing field.

originalus šaltinis (PDF) ↗

Call for Evidence 19 September 2022 FINNISH COMMERCE FEDERATION - REVISION OF THE UNION CUSTOMS CODE Finnish Commerce Federation is a nationwide lobbying organisation whose mission is to promote Finnish commerce. We work to improve the operating conditions for companies active in wholesale and retail trade, to stimulate co-operation within the sector and to en- hance the commercial and employer interests of our members. We play an important role in the labour market, negotiating collective labour agreements, resolving labour disputes and serving our members in employment issues. Our aim is to increase further the scope and relevance our member services. Commerce employs around 300,000 people in Finland. There are around 7,000 member companies in the scope of Finnish Commerce Federation.

…around 300,000 people in Finland. There are around 7,000 member companies in the scope of Finnish Commerce Federation. E-commerce operations & risk management Finnish Commerce Federation finds it problematic that customs clearance for products de- livered from outside the EU treats EU companies and companies outside the EU unequally. Consignments delivered directly to EU member states from outside the EU are not subject to customs duties if the value of the consignment is up to EUR 150. The unfair competitive advantage of companies outside the EU is highlighted particularly in the business-to-consumer market, where purchases are often low-value and pertain to individual products. When a consumer buys products worth up to EUR 150 from, for exam- ple, Chinese or North American marketplaces, there are no import duties due to the duty relief on low value consignments -rule.

…or North American marketplaces, there are no import duties due to the duty relief on low value consignments -rule. It is not financially sensible for EU retailers to buy products individually, so when an EU retailer buys the same products in large batches from outside the EU, customs duties must be paid in connection with the import. The customs duties paid by an EU company raises the consumer price of each product. This creates an unfair competitive advantage for companies outside the EU, which can sell their products for a lower price, discounted by the amount of customs duties. The unequal treatment of companies is not limited to customs duties. Paid customs duties also impact the amount of value-added tax. Because the taxable amount for VAT on im- portation includes customs duties, they also increase the share of VAT in the product’s price.

…amount for VAT on im- portation includes customs duties, they also increase the share of VAT in the product’s price. The competition neutrality of companies must be improved by removing the customs duty relief on low value consignments. This change ensures that customs clearance does not give an unequal competitive advantage to companies outside the EU. Ref. Ares(2022)6469816 - 19/09/2022 The report commissioned by the Commission (Report by the Wise Persons Group on the Reform of the EU Customs Union) supports the abolishment of duty relief on low value consignments. According to the report, the duty relief in question increases the distortion of competition and leads to sellers dividing consignments into smaller, less than EUR 150 parts in order for consumers to receive the products for a lowered price without customs duties.

…less than EUR 150 parts in order for consumers to receive the products for a lowered price without customs duties. Dividing orders into parts also weakens ecological sustainability by increasing the amount of packaging materials, among other things.

originalus šaltinis (PDF) ↗

Call for Evidence 5 May 2022 FINNISH COMMERCE FEDERATION - VAT IN THE DIGITAL AGE Finnish Commerce Federation is a nationwide lobbying organisation whose mission is to promote Finnish commerce. We work to improve the operating conditions for companies active in wholesale and retail trade, to stimulate co-operation within the sector and to en- hance the commercial and employer interests of our members. We play an important role in the labour market, negotiating collective labour agreements, resolving labour disputes and serving our members in employment issues. Our aim is to increase further the scope and relevance our member services. Commerce employs around 300,000 people in Finland. There are around 7,000 member companies in the scope of Finnish Commerce Federation.

…around 300,000 people in Finland. There are around 7,000 member companies in the scope of Finnish Commerce Federation. Future of VAT reporting and e-invoices Finnish Commerce Federation strongly supports measures to combat tax fraud and ac- tions to address non-compliance. Our view is any measures designed to reduce VAT fraud, such as DRRs, must be designed in such a way that they work in harmony with the existing commercial landscape, thereby causing minimal business disruption. The current landscape with DRRs is that they are burdensome for businesses to comply with, and this is compounded by the fact they are becoming increasingly fragmented be- tween Member States. EU is the best level to introduce standards for e-invoices and to harmonize VAT compliance.

…be- tween Member States. EU is the best level to introduce standards for e-invoices and to harmonize VAT compliance. However, the price tag for companies for introducing DRRs, new VAT reporting require- ments and compulsory e-invoices is extremely high. These measures require companies to modify their ERPs which is never easy or cheap. High cost affects especially to SMEs. At the worst SMEs need to postpone their strategic investments in order to build their ERPs to comply with the DRRs and e-invoices. That is why a wider choice of system should be accepted and flexibility is needed in order not to create immediate administra- tive burden for SMEs. We welcome harmonized DRR as a long term solution. However, in short run we think that the best way to foster e-invoices lays on the market-based solutions.

…solution. However, in short run we think that the best way to foster e-invoices lays on the market-based solutions. Market based solutions ensure low costs for companies and wide acceptance of e-invoices. Thus, we think EC should concentrate on publishing a non-binding recommendation providing a common design for reporting obligations across the EU and possibly requiring taxpayers to record data about their cross border VAT transactions in a standard digital format, which tax authorities can access upon request. Ref. Ares(2022)3465117 - 05/05/2022 Single EU VAT registration The extension of the VAT One-Stop Shop (OSS) on 1st July 2021 has provided a funda- mental and concrete simplification of a complex VAT system. There is now a significant opportunity to build on this progress by expanding the OSS to all goods transactions where the seller is not located in the EU country of taxation.

…progress by expanding the OSS to all goods transactions where the seller is not located in the EU country of taxation. Businesses that sell remotely should be able to report VAT on their entire EU logistics chain through a single portal. In particular, it is key that the reform extends to, (1) cross-border movement of own inven- tory across the EU (with no or limited cash-flow cost for businesses), and (2) domestic B2C sales of goods by a seller that is not established in that EU country. It should also be allowed to report domestic B2B sales. Without this change, the EU VAT system will continue to disadvantage European busi- nesses and put administrative borders across the Single Market. The millions of SMEs at the heart of the EU economy feel this most acutely, limiting their growth.

…the Single Market. The millions of SMEs at the heart of the EU economy feel this most acutely, limiting their growth. Businesses should be able to choose to store inventory close to their customers to shorten delivery times, without incurring additional VAT registration and compliance costs. However, based on today’s rules, business have to VAT register in every country in which they store stock, even before a final sale has taken place. In doing so, a business must file an average of 13 documents to complete one VAT registration process, wait an average of 100 days to receive a VAT number, submit up to 60 VAT & statistical filings per country per year, and spend many thousands of Euros in compliance costs. The benefits of a Single VAT Registration extend to tax authorities, customs authorities, national treasuries, businesses, consumers and the environment.

…extend to tax authorities, customs authorities, national treasuries, businesses, consumers and the environment. • Tax authorities will benefit from increased compliance, and facilitated reporting and auditing of cross-border goods movements. • National governments will benefit from a more competitive EU market and in- creased trade, leading to additional tax revenues. • Businesses, particularly SMEs, will gain greater access to intra-EU trade, be more competitive and incur fewer tax compliance fees. Apart from the e-commerce sec- tor, benefits extend to other sectors as well such as toll manufacturing, leasing of moveable property, wholesaling, manufacturing with movement of machinery etc. • Customers will be able to access more competitive prices, faster delivery and a greater choice of goods. • The advantages of a Single VAT Registration also extend to environmental con- cerns.

…and a greater choice of goods. • The advantages of a Single VAT Registration also extend to environmental con- cerns. For example, a regime covering pan-EU inventory storage in e-commerce would encourage bulk inventory placements close to customers, which have cause considerably lower CO2 emissions than orders individually shipped for long dis- tances.

originalus šaltinis (PDF) ↗

…1 (2) 6 October 2023 Finnish Commerce Federation • Eteläranta 10, P.O. Box 340, FI-00131 Helsinki • t. +358 9 172 850 • Business ID 1957903-2 www.kauppa.fi • [email protected] FINNISH COMMERCE FEDERATION – REVISION OF THE UNION CUSTOMS CODE Finnish Commerce Federation is a nationwide lobbying organisation whose mission is to promote Finnish commerce. We work to improve the operating conditions for companies active in wholesale and retail trade, to stimulate co-operation within the sector and to enhance the commercial and employer interests of our members. We play an important role in the labour market, negotiating collective labour agreements, resolving labour disputes and serving our members in employment issues. Our aim is to increase further the scope and relevance our member services. Commerce employs around 300,000 people in Finland.

…is to increase further the scope and relevance our member services. Commerce employs around 300,000 people in Finland. There are around 7,000 member companies in the scope of Finnish Commerce Federation. General feedback The EU customs reform includes proposals e.g. for a new EU customs authority, an EU customs data center, and simplifications concerning e-commerce remote sales. The Finnish Commerce Federation views the reform favourably and strongly supports the removal of customs duties on low-value goods. Feedback regarding removal of the EUR 150 duty exemption threshold Removing the customs duty exemption for goods valued at up to 150 euros would enhance business competitiveness, ensure fairness in customs procedures, and tackle abuses related to undervaluation of goods.

…competitiveness, ensure fairness in customs procedures, and tackle abuses related to undervaluation of goods. Currently, the exemption for low-value goods leads to unfair competition in consumer business, giving an undue advantage to non-EU online retailers compared to EU retailers. When a consumer purchases products valued at up to 150 euros from non-EU digital marketplaces no customs duties are applicable due to the exemption threshold. However, EU resale businesses import products in large batches, and therefore, customs duties are due. The customs duties paid by EU businesses on imported goods increase the consumer prices of these products. This results in an unfair competitive advantage for non-EU retailers, which can sell their products at prices lower by the amount of the customs duty.

…advantage for non-EU retailers, which can sell their products at prices lower by the amount of the customs duty. Differential treatment of retailers is not limited to just customs duties; paid duties also raises the amount of value- added tax included in the product price. . Feedback regarding the deemed importer regime The Finnish Commerce Federation supports the proposal in respect of deemed importer concept for digital marketplaces. This would make digital marketplaces responsible for all customs formalities and payments instead of private consumers. This approach is already in place for value-added tax, so extending similar regulations to customs is a natural step. Making Ref.

…is already in place for value-added tax, so extending similar regulations to customs is a natural step. Making Ref. Ares(2023)6791231 - 06/10/2023 2 (2) 6 October 2023 digital marketplaces as importers simplifies the customs process from the consumer's perspective and makes it more challenging to evade customs duty payments by undervaluation of goods. It also helps consumers with price comparison since customs duty payments would most likely include in the prices of goods sold by digital marketplaces.

originalus šaltinis (PDF) ↗