European finance ministers have reached agreement on VAT measures including: reduced rates on e-publications; a generalised reverse charge mechanism; interim ‘quick fixes’; and strengthened administrative cooperation against cross-border fraud.
The meeting of the ECOFIN council on 2 October made progress on some of the more contentious VAT measures originating in the Commission’s April 2016 VAT action plan and October 2017 proposals for a definitive EU VAT system.
The measures agreed include:
four ‘quick-fixes’, aimed at introducing adjustments to the EU’s VAT rules in order to fix specific issues pending introduction of a new VAT system (simplifying call-off stock rules, requiring VAT identification number as a condition for exemption, simplifying rules for chain transactions, simplifying proof-of-transport rules for intra-EU supplies), to apply from 1 January 2020;
strengthened administrative cooperation measures, involving increased exchange of information and cooperation between national tax authorities and law enforcement bodies, aimed at tackling large-scale EU VAT fraud, with most of the new provisions to apply from 1 January 2020;
the ‘e-publication’ regulation, allowing member states to apply reduced or zero VAT rates to electronic publications, potentially leading to alignment of VAT rules between physical and electronic publications, to come into effect alongside introduction of the definitive VAT system in 2022; and
the ‘generalised reverse charge’ mechanism, aimed at allowing those member states most severely affected by fraud (i.e. those with carousel fraud making up more than 25% of their total VAT gap) to apply the reverse charge for domestic supplies of goods and services above a threshold of €17,500 per transaction, for a limited period until 30 June 2022 and subject to strict conditions.
EU taxation commissioner, Pierre Moscovici, referring to the recent EU VAT gap figure of around €150bn, praised the agreements reached in council as, ‘another step towards addressing that problem and changing VAT rules for the better’.
Commission vice-president, Valdis Dombrovskis, welcomed the adoption of the e-publication regulation. This decision ‘will ensure an equal tax treatment of paper and digital products, which I think is an important signal we send for the development of the digital single market and, more broadly speaking, for a digital mind-set’, he commented.
Separately, the ECOFIN council formally adopted rules to control illicit cash flows in and out of the EU, tightening controls on people entering or leaving the EU with €10,000 or more in cash, enabling authorities to act on amounts lower than the declaration threshold of €10,000 where criminal activity is suspected, and extending customs controls to cash sent in postal parcels or freight shipments, prepaid cards and precious commodities such as gold.
European finance ministers have reached agreement on VAT measures including: reduced rates on e-publications; a generalised reverse charge mechanism; interim ‘quick fixes’; and strengthened administrative cooperation against cross-border fraud.
The meeting of the ECOFIN council on 2 October made progress on some of the more contentious VAT measures originating in the Commission’s April 2016 VAT action plan and October 2017 proposals for a definitive EU VAT system.
The measures agreed include:
four ‘quick-fixes’, aimed at introducing adjustments to the EU’s VAT rules in order to fix specific issues pending introduction of a new VAT system (simplifying call-off stock rules, requiring VAT identification number as a condition for exemption, simplifying rules for chain transactions, simplifying proof-of-transport rules for intra-EU supplies), to apply from 1 January 2020;
strengthened administrative cooperation measures, involving increased exchange of information and cooperation between national tax authorities and law enforcement bodies, aimed at tackling large-scale EU VAT fraud, with most of the new provisions to apply from 1 January 2020;
the ‘e-publication’ regulation, allowing member states to apply reduced or zero VAT rates to electronic publications, potentially leading to alignment of VAT rules between physical and electronic publications, to come into effect alongside introduction of the definitive VAT system in 2022; and
the ‘generalised reverse charge’ mechanism, aimed at allowing those member states most severely affected by fraud (i.e. those with carousel fraud making up more than 25% of their total VAT gap) to apply the reverse charge for domestic supplies of goods and services above a threshold of €17,500 per transaction, for a limited period until 30 June 2022 and subject to strict conditions.
EU taxation commissioner, Pierre Moscovici, referring to the recent EU VAT gap figure of around €150bn, praised the agreements reached in council as, ‘another step towards addressing that problem and changing VAT rules for the better’.
Commission vice-president, Valdis Dombrovskis, welcomed the adoption of the e-publication regulation. This decision ‘will ensure an equal tax treatment of paper and digital products, which I think is an important signal we send for the development of the digital single market and, more broadly speaking, for a digital mind-set’, he commented.
Separately, the ECOFIN council formally adopted rules to control illicit cash flows in and out of the EU, tightening controls on people entering or leaving the EU with €10,000 or more in cash, enabling authorities to act on amounts lower than the declaration threshold of €10,000 where criminal activity is suspected, and extending customs controls to cash sent in postal parcels or freight shipments, prepaid cards and precious commodities such as gold.
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