The EU’s new VAT rules for e-Commerce, coming into force in 2021, will make online marketplaces liable for collecting VAT on behalf of non-EU businesses using their services to reach EU consumers. Some have suggested such obligations should be expanded to cover EU businesses trading on online marketplaces. In order to comply with such a VAT collection obligation, marketplaces will be pushed to exert control over the operations of small merchants using their services, effectively turning these independent merchants into quasi-subsidiaries of marketplaces against their will and true aspirations. This is a step towards an economy that limits small business internationalization to that of an input in a multinational or online marketplace’s supply chain.
To instead promote a diversified economy that includes independent micro and small enterprises, the European Commission needs to embrace a vision for European online commerce based on enabling truly independent small businesses. Valuing the independence of small businesses is just as critical as expanding their opportunities.