The EU Parliament’s economic and monetary affairs (ECON) committee has tabled its report containing amendments to the Commission’s proposal for creation of a definitive EU VAT system, in advance of the plenary debate and vote in Strasbourg on 2/3 October. The committee published its draft report on 3 May.
The committee report supports the anti-fraud and simplification objectives of the Commission’s October 2017 proposal for a definitive EU VAT system, while suggesting a number of amendments.
The proposal is based around four fundamental principles, or ‘cornerstones’, to be introduced by 2022, including the concept of the ‘certified taxable person’, similar to authorised economic operators in the customs context. In addition, four short-term ‘quick fixes’ are proposed, aimed at improving the day-to-day functioning of the current system from 2019. The Commission published a further proposal for the necessary technical amendments to the principal VAT directive on 25 May.
The ‘cornerstones’ are:
tackling fraud, by charging VAT on cross-border trade between businesses inside the EU;
a one-stop shop, allowing traders to make declarations and payments using a single online portal in their own language and according to the same rules as in their home country;
the ‘destination’ principle, whereby the final amount of VAT is always paid to the member state of the final consumer and charged at the rate of that member state; and
simplified invoicing rules, allowing sellers to prepare invoices according to the rules of their own country even when trading across borders.
The ‘quick fixes’, mainly limited to certified taxable persons, are:
requiring the VAT identification number of the customer as a substantive condition for exempting intra-community supplies of goods;
simplifying the rules for those parts of chain transactions which do not involve the physical movement of goods;
simplifying the rules for suppliers in one member state who move ‘call-off stock’ to a warehouse in another member state for eventual sale to a known buyer; and
simplifying the rules on providing proof of transport for exempting intra-community supplies of goods.
Among the amendments put forward in the report, the committee calls for:
‘certified taxable person’ status to be clearly defined in regulations and comprehensive guidelines, and aligned as closely as possible with the criteria for authorised economic operators;
simplified procedures for applications by SMEs;
an appeals procedure for rejected applications to be put in place by 1 June 2020 (with applicants having to wait at least six months before making another application);
the authorities to review certified taxable person status at least every two years;
introduction of a VAT dispute resolution mechanism, based on the current EU VAT cross-border ruling pilot project, to operate alongside national VAT dispute mechanisms; and
introduction of a mechanism to provide taxpayers with automatic notifications of changes to applicable VAT rates.
The EU Parliament’s economic and monetary affairs (ECON) committee has tabled its report containing amendments to the Commission’s proposal for creation of a definitive EU VAT system, in advance of the plenary debate and vote in Strasbourg on 2/3 October. The committee published its draft report on 3 May.
The committee report supports the anti-fraud and simplification objectives of the Commission’s October 2017 proposal for a definitive EU VAT system, while suggesting a number of amendments.
The proposal is based around four fundamental principles, or ‘cornerstones’, to be introduced by 2022, including the concept of the ‘certified taxable person’, similar to authorised economic operators in the customs context. In addition, four short-term ‘quick fixes’ are proposed, aimed at improving the day-to-day functioning of the current system from 2019. The Commission published a further proposal for the necessary technical amendments to the principal VAT directive on 25 May.
The ‘cornerstones’ are:
tackling fraud, by charging VAT on cross-border trade between businesses inside the EU;
a one-stop shop, allowing traders to make declarations and payments using a single online portal in their own language and according to the same rules as in their home country;
the ‘destination’ principle, whereby the final amount of VAT is always paid to the member state of the final consumer and charged at the rate of that member state; and
simplified invoicing rules, allowing sellers to prepare invoices according to the rules of their own country even when trading across borders.
The ‘quick fixes’, mainly limited to certified taxable persons, are:
requiring the VAT identification number of the customer as a substantive condition for exempting intra-community supplies of goods;
simplifying the rules for those parts of chain transactions which do not involve the physical movement of goods;
simplifying the rules for suppliers in one member state who move ‘call-off stock’ to a warehouse in another member state for eventual sale to a known buyer; and
simplifying the rules on providing proof of transport for exempting intra-community supplies of goods.
Among the amendments put forward in the report, the committee calls for:
‘certified taxable person’ status to be clearly defined in regulations and comprehensive guidelines, and aligned as closely as possible with the criteria for authorised economic operators;
simplified procedures for applications by SMEs;
an appeals procedure for rejected applications to be put in place by 1 June 2020 (with applicants having to wait at least six months before making another application);
the authorities to review certified taxable person status at least every two years;
introduction of a VAT dispute resolution mechanism, based on the current EU VAT cross-border ruling pilot project, to operate alongside national VAT dispute mechanisms; and
introduction of a mechanism to provide taxpayers with automatic notifications of changes to applicable VAT rates.
