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ECON committee report on ‘definitive VAT system’ proposals

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The EU Parliament’s economic and monetary affairs (ECON) committee has published its draft report welcoming the ‘cornerstones’, the ‘quick fixes’ and the concept of ‘certified taxable persons’ proposed in the Commission’s October 2017 communication on fundamental principles for a new definitive single EU VAT area.

Besides the ‘cornerstones’, which include tackling cross-border EU VAT fraud, implementing the destination principle and a one-stop shop for businesses, the Commission proposed four ‘quick fixes’ to the current VAT system (including proof of VAT identification numbers, simplified proof of intra-community transport, simplified chain transactions and ‘call-off stock arrangements’). Reducing fraud is the key objective of the new system.

The report puts forward amendments calling for the Commission to clarify the criteria for ‘certified taxable persons’ (CTPs) through implementing regulations and comprehensive guidelines, which should provide for an appeals procedure where applications for CTP status are rejected. The concept of the CTP is based on authorised economic operator (AEO) status under the EU customs code. The ECON committee has asked the Commission to ensure close alignment between CTP and AEO status.

The ECON committee recommends developing the current EU VAT cross-border ruling pilot project into a comprehensive VAT dispute resolution mechanism by 1 June 2020. This should run alongside member states’ own national mechanisms for resolving internal tax disputes.

The report goes further, recommending establishment by 1 June 2020 of a mechanism to provide taxpayers with automatic notifications of changes to the VAT rates applicable in different member states. The system should be based on harmonised standards and reporting forms for use across the EU.

A further Commission proposal setting out detailed technical amendments to the VAT directive will follow later in 2018. The date proposed for implementation of the new system is 1 January 2019.


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