The European Commission’s VAT Committee has updated its guidelines in response to questions raised by delegations from the UK and Belgium concerning arrangements which seek to avoid the VAT regime for the distance selling of goods, such as the practice by some online retailers of splitting the supply of goods from their transport and delivery to avoid registering and accounting for VAT in the member state of the customer. The Committee agreed that the distance selling regime will apply where the supplier ‘intervenes directly or indirectly in the transport or dispatch of the goods’. Although VAT Committee guidelines are not binding, they provide a useful interpretation of the rules and it is expected that HMRC will look at relevant planning structures. See www.bit.ly/TZK9mO.
Last week, the Confédération Fiscale Européenne (CFE) has issued an opinion statement suggesting that the European Commission should propose to ‘delete or modify’ articles 93–130 of the VAT Directive, which give EU member states limited powers to determine rates. The opinion stated that as the EC moves away from collecting VAT in the member state of a supplier’s establishment, harmonising rates will no longer be necessary. The practical need for these restrictions, according to the CFE, has also been reduced by the special rules for distance sales of goods and the common regime on e-commerce. While the CFE acknowledges that the harmonisation of rates could still be relevant for cross-border shopping, it ‘considers that there is no reason to systemically limit the freedom of the member states to introduce reduced rates when they consider this to be appropriate’. See www.bit.ly/1Wg28U2.
As Tax Journal went to press, in a surprising U-turn the EC announced that it plans to allow member states more freedom to set reduced rates of VAT on some types of goods. The EC review will start in 2016 and will include an assessment of the impact of reduced VAT rates on new technologies, including e-books; and other standard-rated products such as tampons, the taxation of which has caused outcry in the UK and other member states. See www.bit.ly/1XymHrT.
The European Commission’s VAT Committee has updated its guidelines in response to questions raised by delegations from the UK and Belgium concerning arrangements which seek to avoid the VAT regime for the distance selling of goods, such as the practice by some online retailers of splitting the supply of goods from their transport and delivery to avoid registering and accounting for VAT in the member state of the customer. The Committee agreed that the distance selling regime will apply where the supplier ‘intervenes directly or indirectly in the transport or dispatch of the goods’. Although VAT Committee guidelines are not binding, they provide a useful interpretation of the rules and it is expected that HMRC will look at relevant planning structures. See www.bit.ly/TZK9mO.
Last week, the Confédération Fiscale Européenne (CFE) has issued an opinion statement suggesting that the European Commission should propose to ‘delete or modify’ articles 93–130 of the VAT Directive, which give EU member states limited powers to determine rates. The opinion stated that as the EC moves away from collecting VAT in the member state of a supplier’s establishment, harmonising rates will no longer be necessary. The practical need for these restrictions, according to the CFE, has also been reduced by the special rules for distance sales of goods and the common regime on e-commerce. While the CFE acknowledges that the harmonisation of rates could still be relevant for cross-border shopping, it ‘considers that there is no reason to systemically limit the freedom of the member states to introduce reduced rates when they consider this to be appropriate’. See www.bit.ly/1Wg28U2.
As Tax Journal went to press, in a surprising U-turn the EC announced that it plans to allow member states more freedom to set reduced rates of VAT on some types of goods. The EC review will start in 2016 and will include an assessment of the impact of reduced VAT rates on new technologies, including e-books; and other standard-rated products such as tampons, the taxation of which has caused outcry in the UK and other member states. See www.bit.ly/1XymHrT.
