The VAT gap across the EU decreased by €8.7bn during 2015 to an overall figure of €151.5bn. As a percentage, this represents a narrowing of the gap by 2.1% to 12.7% in 2015. Actual VAT revenues for the year across the EU rose by 5.8%. In the UK, the VAT gap remained stable (showing an increase of 0.3% in 2015).
The latest VAT gap figures include, for the first time, revenues emerging from the new VAT rules for cross-border sales of e-services, which came into force on 1 January 2015.
In October, the European Commission will set out proposals for the next stage of EU VAT reform, based on its VAT action plan adopted in April 2016. This will look to create a single EU VAT area and re-establish the destination principle of charging VAT on cross-border trade within the EU.
The current system, introduced as a temporary measure on the inception of the single market in 1993, split cross-border movements of goods into an exempt supply in the member state of departure of the goods and an acquisition taxed in the member state of destination, which increases the opportunity for fraud. However, the system is still with us, comments Richard Asquith, VP global tax at Avalara, as ‘successive attempts to reform it have failed due to political disagreements surrounding revenue share and collections’.
The VAT gap across the EU decreased by €8.7bn during 2015 to an overall figure of €151.5bn. As a percentage, this represents a narrowing of the gap by 2.1% to 12.7% in 2015. Actual VAT revenues for the year across the EU rose by 5.8%. In the UK, the VAT gap remained stable (showing an increase of 0.3% in 2015).
The latest VAT gap figures include, for the first time, revenues emerging from the new VAT rules for cross-border sales of e-services, which came into force on 1 January 2015.
In October, the European Commission will set out proposals for the next stage of EU VAT reform, based on its VAT action plan adopted in April 2016. This will look to create a single EU VAT area and re-establish the destination principle of charging VAT on cross-border trade within the EU.
The current system, introduced as a temporary measure on the inception of the single market in 1993, split cross-border movements of goods into an exempt supply in the member state of departure of the goods and an acquisition taxed in the member state of destination, which increases the opportunity for fraud. However, the system is still with us, comments Richard Asquith, VP global tax at Avalara, as ‘successive attempts to reform it have failed due to political disagreements surrounding revenue share and collections’.
