WELCOME TO THE HOMEPAGE OF THE INTERNATIONAL VAT ASSOCIATION, THE PLACE TO JOIN YOUR FELLOW INTERNATIONAL VAT PROFESSIONALS
The International VAT Association (IVA), formed in 1994, is the world’s leading independent body on international VAT issues, representing the interests of businesses and advisers involved in VAT or equivalent turnover taxes around the globe. In Europe, the IVA’s membership is represented in almost all 28 EU Member States. Globally, the Association covers all major international markets.
The members of the Association are of varying sizes from major international law and accounting firms to smaller businesses, but all being highly specialised in their chosen field of indirect taxation.
The Association is unique in that it provides to its members a forum for exchanges, through its website, LinkedIn Group and via regular conferences held in different locations around the world.
The forums for exchange enable members to share ideas, develop their businesses and determine common courses of action to work with National Tax Administrations and the European Commission to propose simplifications and procedures allowing members, their clients and business in general, to become more competitive and less constrained by administrative burdens.
The Association has over 140 members covering the EC and non EC countries (Australia, Hong Kong, Iceland, India, Israel, Japan, Mexico, Switzerland, South Africa, South Korea, Norway, Russia, USA, Turkey) representing many thousands of clients, each of whom has a very direct interest in the development of value added and turnover taxes.
For any business working within the field of VAT and turnover taxes, this is the only multi-national Association which exists to represent their business interests.
Representatives of the Board of the Association, Stephen Dale, Emmanuel Cottessat and Cyrille Konter, met with the DINR, the Non-Resident Unit of the French tax authorities in charge of EU companies not established in France but registered for VAT purposes in France.Read more ...
Input VAT deduction from advance payments is part of a taxable person’s daily business. Where the supply does not take place, input VAT deduction can only be denied if the payer, at the time of the payment on account, knew or reasonably should have known that the supply was uncertain (judgement of 31.05.2018, C-660/16 and C-661/16, Kollroß und Wirtl)...Read more ...
ECON hearing on VAT administrative cooperation - 16 May 2018
The ECON Committee of the European Parliament has held a public hearing on the VAT administrative cooperation file the same that EU finance ministers later discussed at their May ECOFIN meeting (see article below for details).
The European Parliament’s work on the dossier is led by the rapporteur MEP Roberts Zile (ECR/LAT), who published his draft report earlier in April.
He added that operating boundaries of Eurofisc needed to be addressed. References to relevant data protection provisions have been inserted. What is more, the rapporteur aimed at striking a balance between interests and responsibilities of the requesting and requested authorities. Finally, he called for a simplified mechanism on dealing outstanding liabilities.
Olle Ludvigsson (S&D/SWE) and Molly Scott Cato (Greens-EFA/UK) expressed their reservations towards Mr. Zile’s proposed deletion of the certified taxable person (CTP) concept. However, especially Mr. Ludvigsson remained optimistic that a compromise between the political groups can be found.
In terms of next steps, a committee vote is scheduled for 19 June, whilst a plenary vote is expected for 2 July. As a reminder, the European Parliament only retains consultative powers, whereas the Council makes the actual decision by unanimity.
Three ECON draft reports on VAT reform published - 2 May 2018
The ECON Committee has published draft reports on three pending Commission VAT proposals: the VAT rates reform, the definitive regime and certified taxable person (CTP), and the special VAT scheme for SMEs.
As always on tax files, the European Parliament only provides its non-binding opinion. The Member States will make an actual decision by unanimity.
Draft report on VAT rates. The first report on the VAT rates reform, has been prepared by the MEP Tibor Szanyi (S&D/HUN). In his report, Mr. Szanyi proposes amendments to the Commission proposal to ensure that reduced rates and exemptions benefit the final consumer. Moreover, he insists that they should be applied to pursue general interest objectives, meaning to prioritise goods or services that have positive social and environmental impacts. For the same reasons, he also proposes a maximum standard VAT rate of 25%. Any additional tax revenues required should stem from increasing corporate taxes, Mr. Szanyi believes.
In terms of next steps, Mr. Szany’s report will be voted on in the ECON Committee probably before the summer break in July. A Plenary vote is currently forecasted for 2 October.
Link: http://www.europarl.europa.eu/sides/getDoc.do?type=COMPARL&reference=PE- 621.118&format=PDF&language=EN&secondRef=01
Report on definitive regime and CTP
The report on the definitive regime and CTP, in turn, was drafted by the MEP Jeppe Kofod (S&D/DEN). Mr. Kofod welcomes the Commission proposal, including the ‘cornerstones’ for a definitive VAT system, the quick fixes and the introduction of the new CTP.
However, he calls for further clarifying the requirements for the CTP status, and closely align it with the criteria for Authorised Economic Operator-status under the EU Customs Code. He also calls for a pan-European VAT dispute resolution mechanism, and an automatic notification mechanism to inform taxpayers of changes to Member States’ VAT rates. This mechanism should be based on standardised data formats and fields in order to ensure interoperability, Mr. Kofod concludes.
Link: http://www.europarl.europa.eu/sides/getDoc.do?type=COMPARL&reference=PE- 621.119&format=PDF&language=EN&secondRef=01
Second, Mr. Vandenkendelaere aims to impose administrative simplifications for SMEs. He asks to set up a one stop shop for VAT returns, enabling the filing of VAT returns from different Member States through an e-portal. He also calls for deleting the proposed annual VAT return for small companies, as he believes that it would not imply a real simplification for SMEs.
Plenary discusses future of Europe with Prime Minister of Belgium, tax on the agenda – 3 May 2018
Ms. Gomes also asked the prime minister why Belgium is opposing VAT reform proposed by the Commission.
Commission proposes detailed technical measures for the operation of the definitive VAT system - 25 May 2018
The European Commission has published its long-awaited technical measures for the functioning of an eventual definitive VAT system based on the destination principle. This follows the broader definitive regime related proposals that the Commission published in January this year.
According to the Commission, out of the 408 articles in the VAT Directive, around 200 will need to be adapted. The package of detailed technical measures includes, notably, the following:
- Definition of cross-border trade of goods as a single taxable supply
- Introduction of the necessary provisions to put in place an online OSS portal for all B2B EU traders
- Cutting red tape, for example reducing the number of administrative steps that need to be taken by businesses when selling to other companies in other Member States. Specific reporting obligations linked to the transitional VAT regime will no longer be needed for trade in goods. Further invoicing regarding EU trade will be governed by the rules of the member state of the seller
- Clarification that it is the seller that should charge the VAT due on a sale of goods to a customer in another EU country, at the rate of the Member State of destination. Only where the customer is a Certified Taxable Person (CTP) will the acquirer of the goods be liable for VAT
As always with direct and indirect tax files, all EU Member States must agree on the proposal unanimously. The European Parliament, for its part, only submits its non-binding opinion.
In the meanwhile, Council negotiations on the definitive regime proposals are not progressing well, as a growing number of member states are expressing their misgivings. Certain Member States are particularly mistrustful about the prospect of other Member States’ tax administrations collecting taxes on their behalf. Many are left wondering why the Commission went through the trouble of proposing the detailed technical measures now, when it is not even certain that the Member States will agree to move ahead with the definitive regime at all.
Link: http://ec.europa.eu/transparency/regdoc/rep/1/2018/EN/COM-2018-329-F1-EN-MAIN- PART-1.PDF
Member States agree on the need to bolster administrative cooperation on VAT
Finally, the ministers also discussed the need to amend the Council Regulation on VAT administrative cooperation.
Almost all EU Member States recognized that more measures to improve VAT collection are necessary, and that trust between tax authorities should be further improved. However, some smaller Member States were critical about the possible impact that joint audits could have on their limited capacity.
Bulgarian Presidency publishes roadmap outlining next steps for the digital tax files - 23 May 2018
The Bulgarian Presidency has published a roadmap for advancing the work and negotiations on the Commission’s digital tax proposals.
The Presidency assesses that by June there will have been a sufficient number of technical meetings between EU diplomats so as to advance for a first compromise text on the short-term proposal. The Presidency assesses that for the long-term proposal as well, the technical discussions will have finalised by June. However, on this file the Bulgarians emphasise the need to monitor discussions at the OECD and G20 levels, and to contribute to these discussions.
ECOFIN discusses VAT, formally adopts tax intermediaries proposal, removes two jurisdictions from EU ‘Tax haven’ list - 25 May 2018
At the May ECOFIN, the EU finance ministers once again dealt with a number of tax files, some of which have been in a stalemate for a long time already.
Against optimistic hopes and expectations, no agreement was reached in the end on any of the VAT files on the table. However, Member States did formally adopt the tax intermediaries proposal (on which a political agreement was reached already in March), and removed two jurisdictions from the EU list of non-cooperative jurisdictions.
The Bulgarian Presidency filed three VAT files for discussion at this ECOFIN: the Commission proposal on improving VAT administrative cooperation, the proposal to allow for reduced VAT rates for e-publications, and the proposal on a general reverse charge mechanism (GRCM).
It was expected that a consensus would be found on the VAT administrative cooperation package. On e-publications and GRCM, things were less clear. As a reminder, France objects to the introduction of a GRCM pilot system in the EU as it fears that it will undermine the unity of the EU VAT system. As a retaliation, Czech Republic is vetoing the e-publications proposal. The Czech government believes that the GRCM would be a crucial tool to address wide-spread carousel fraud in Central and Eastern Europe.
No deal on VAT administrative cooperation
The Commission proposed a reform of VAT administrative cooperation on 30 November 2017.
Commissioner Moscovici and the Bulgarian Presidency hoped that a political agreement would be reached on the proposal. The Bulgarian Presidency had introduced a number of compromises in the text in order to ensure consensual support for it.
A particular stumbling block had been to determine how many Member States should ask another one to open an administrative inquiry. The Presidency proposed that the competent authorities of at least two Member States would have to consider that an administrative inquiry is necessary. They should also present a common reasoned request ‘containing indications or evidence of risks of VAT evasion or fraud.’ If these conditions are met, the requested authority will only be able to refuse to undertake the inquiry on the grounds explicitly set out in the Regulation.
Moreover, the compromise text also provides the possibility for Member States to provide relevant information to OLAF. However, if this information comes from another Member State, its transfer to OLAF may require the prior agreement of that Member State.
Speaking at the beginning of the ECOFIN, Commissioner Moscovici emphasised that the Member States would agree on the text at a record time – barely over half a year since the initial proposal’s publication. However, his optimism was faced with a cold shower from the French finance minister, who said that France would need more time to study and find an agreeable compromise to the proposal. Thus, blocked by a French veto, the item will return on the finance ministers’ agenda probably in June.
Stalemate remains on e-publications vs. general reverse charge
Less surprisingly, Czech Republic maintained its veto on the e-publications proposal after France and a number of other Member States (including Greece, Slovenia and Cyprus amongst others) first blocked the GRCM.
On GRCM, France re-iterated its concerns that it would pose a threat to the unity and coherence of the EU VAT system. The French finance minister proposed that instead of a general reverse charge system, the scope of the sectoral reverse charge system could be expanded. This proposal was backed by Greece as well.
Czech Republic together with Romania, however, argued to the contrary. The Czech minister in particular insisted that the GRCM is crucial to her government, as the country needs it in order to fight against wide-spread carousel fraud in the region. Hence the country’s veto of the e- publication proposal, which it knows to be close to the heart of the French. However, Czech Republic may be burning out its political capital fast, as a number of Member States are losing their patience with the Czechs using an unrelated VAT dossier as hostage to its demands.
In the absence of any solution out of this impasse, the stalemate goes on.
Court of Justice of the EU - Rulings
C‐566/16: VAT special scheme for SMEs - 17 May 2018
The Fifth Chamber of the CJEU has ruled that EU law does not preclude legislation which excludes a special VAT scheme providing for an exemption for small enterprises from being applied to a taxable person who fulfils all the material conditions, but did not exercise the right to opt for the application of that scheme, at the same time as he declared the commencement of his economic activities to the tax authority.
New Zealand proposes ‘Amazon tax’ imposing GST on low-value offshore sales - 1 May 2018
The New Zealand government has proposed a change in the law that would require offshore suppliers of low-value goods to New Zealand consumers to collect and return GST on those goods.
The move follows Australia’s plan to impose GST on low-value imported goods from July 1 2018.
This so-called ‘Amazon tax’ would close a loophole that gives offshore companies selling to New Zealand consumers a competitive advantage over domestic retailers, the government said.
Link: https://mnetax.com/new-zealand-proposes-amazon-tax-imposing-gst-on-low-value-offshore- sales-27415
Europol: EU-wide VAT fraud organised crime group busted - 4 May 2018
According to Europol, an organised criminal group involved in pan-European VAT fraud and money laundering has been dismantled in a joint operation led by the Spanish National Police, together with the Spanish Tax Agency and supported by Europol and Eurojust.
The investigation also saw the involvement of national authorities from Belgium, Bulgaria, Germany, Hungary, Italy, Portugal and Romania. In total, the damage caused to the EU economy due to this VAT fraud reached EUR 60 million.
Between 18 and 20 April; 58 suspects were arrested in Belgium, Germany, Portugal and Spain and 101 premises were searched in various EU countries. As a result, law enforcement seized 52 luxury cars, numerous documents, EUR 400 000 in cash, IT material and one weapon.
Link: https://www.europol.europa.eu/newsroom/news/eu-wide-vat-fraud-organised-crime-group- busted
MEP Questions & Answers
Margin VAT scheme and double taxation on the sale/purchase of building land - 26 April 2018
The European Commission has replied to a question asked by the MEP Jean-Paul Denanot (S&D/FRA) with regard to the margin VAT scheme and double taxation on the sale or purchase of building land.
In his question, Mr. Denanot states that although the sale of building land by taxable persons is subject to VAT in principle, Article 392 of the VAT Directive enables Member States to apply a margin VAT scheme to the sale of building land purchased for resale by a taxable person who could not claim back the VAT paid on that purchase. He asks the Commission to confirm that the margin VAT scheme does not apply to building land purchases for resale when the original purchase was not subject to VAT.
In his reply, Commissioner Moscovici confirms that where, as a result of building land being exempt and the purchase price contains an element of VAT which cannot be deducted, Member States may provide for the taxable amount in respect of such building land to be the difference between the selling price and the purchase price (ie the margin).
EESC publishes view on Commission’s proposed VAT rates reform - 23 May 2018
The European Economic and Social Committee (EESC) has published additional views on the Commission s VAT reform packages, and most of all on the proposed VAT rates reform.
In its opinion, EESC re-iterates its concerns that a fragmented VAT system may pose obstacles for business especially smaller ones. Furthermore, EESC:
- Calls on EU Member States and the Commission to exempt from VAT such organisations and associations that provide assistance to disadvantaged people
- Agrees with the Commission's proposal to allow Member States to use two reduced rates of a minimum of 5%, as well as one reduced rate lower than 5%, and considers that they should be applied to certain classes of goods and services. It also recommends that the Member States continue to apply reduced rates to certain classes of goods and services of general interest
- Recommends that Member States provide the institutions responsible for combating VAT fraud with the human, financial and logistical resources they need
- Believes that the Commission`s objectives can only be achieved if the Member States make the necessary efforts to adopt the definitive VAT system within a reasonable period of time
Disclaimer: The information contained in the present page is general and does not constitute legal advice. Before taking any decision or action on the above information you should take the appropriate professional advice.