The European Commission has replied to a question asked by three British Green MEPs with regard to solar energy and VAT. In their question, the MEPs refer to a Court of Justice of the EU’s (CJEU) ruling …
The European Commission has replied to a question asked by three British Green MEPs with regard to solar energy and VAT. In their question, the MEPs refer to a Court of Justice of the EU’s (CJEU) ruling which has led the UK HMRC to conclude that it must remove the reduced 5% VAT rate on residential solar panel installations and bring the rate up to 20%. The MEPs argue that this will hinder UK’s renewable energy goals, and therefore ask the Commission whether the CJEU ruling in fact provides for adequate flexibility allowing for a reduced rate on solar energy infrastructures, and whether it will consider amending the VAT Directive so as to allow for reduced VAT rates on renewables and energy efficient products. In his reply, Commissioner Moscovici confirms the interpretation of the CJEU decision by the HMRC, and states that there are other means beyond reduced VAT rates to support energy saving materials, including direct subsidies. The Commissioner moreover confirms that the upcoming VAT Action Plan will include an analysis on VAT rates.
Council Conclusions on “The Single Market Strategy for services and goods” – 29 February 2016
Member States have adopted conclusions on the Single Market Strategy proposed by the European Commission in autumn. Of particular interest, the conclusions include provisions regarding VAT, and notably call for a significant reduction in compliance costs stemming from VAT requirements. Member States consequently look forward to Commission plans regarding VAT simplification for SMEs active in e-commerce, as well as a more comprehensive simplification package for SMEs. This demonstrates the well-known appetite of Member States to simplify and streamline EU VAT rules with the view of removing obstacles to businesses and tackling fraud.
“Digital tax developments in the Asia-Pacific region” – 23 February 2016
Taxamo has published its latest digital tax update for the Asia-Pacific region which reveals a number of major changes in the region’s digital tax landscape. For example Japan has introduced changes to its consumption tax legislation, whereby now all foreign companies that supply digital services to Japanese consumers must collect and remit an 8% consumption tax to the Japanese authorities. New Zealand for its part will amend its Goods and Services Tax (GST) laws in October so that sales of digital services by foreign suppliers above a threshold of approximately €35.000 for a 12-month period will be subject to a GST rate of 15%. In addition, a number of other countries and jurisdictions in the region are undertaking or planning digital tax reforms, including Australia, Philippines and Singapore.
“EY Notes Surge in Indirect Tax Burdens, Reforms” – 2 March 2016
According to Tax News, EY has published its latest indirect tax report for 2016. The report notably shows that a growing number of countries are implementing indirect tax systems to address decreasing revenues caused by developments in the digital sector. Moreover, indirect taxes continued to increase on a global level, and over 160 countries have established VAT or GST regimes. Puerto Rico will introduce a new VAT system in April 2016 – the first US jurisdiction to do so.
EY indirect tax report 2016:
ECA report – Tackling Intra-Community VAT \Fraud: More action needed – 3 March 2016
The European Court of Auditors (ECA) has published a report entitled Tackling intra-Community VAT fraud: More action needed. The report notably argues that the current EU regime for tackling VAT fraud is not as effective as it should and notably suffers from a lack of comparable data and indicators. For the purpose of the report, delegations of the ECA visited five Member States and saw indications of a lack of effective cross-checks between customs and tax data, limitations in the quality of data shared between Member States’ tax authorities, and lack of cooperation and coordination between relevant authorities. The report consequently puts forward a number of recommendations to the Commission, calling it notably to put forward amendments to enable effective cross-checks between customs and tax data, to focus on monitoring Member States’ performance (timing, quality of data etc.) in their exchange of information, to establish a common system of collecting intra-community statistics on VAT fraud, and to encourage Member States to better coordinate their reverse charge policies.