The Fiscalis Tax Gap Project Group (TGPG) has published its report on VAT gap estimations. The report brings together data provided by members of the TGPG, and covers …
Fiscalis report on VAT gap estimations and methodologies – 11 March 2016
The Fiscalis Tax Gap Project Group (TGPG) has published its report on VAT gap estimations. The report brings together data provided by members of the TGPG, and covers information on the estimations themselves for a number of Member States, as well as the various methodologies used for data gathering, management and interpretation. With regard to VAT gap data collection overall, the report notably concludes that there are no one-size-fits-all methodology for such estimations as depending on specific cases different factors must be considered, for example the purpose of the estimations.
Joint follow-up to the European Parliament resolution with recommendations to the Commission on bringing transparency, coordination and convergence to corporate tax policies in the Union, and the European Parliament resolution on tax rulings and other measures similar in nature or effect, adopted by the Commission on 16 March 2016.
Regarding the request to submit a legislative proposal on transparency of customs-free ports (ECON A5)
As far as VAT and customs are concerned, setting a maximum time limit during which goods can be sold VAT or customs-duty exempt in customs free ports would be disproportionate. Goods covered by customs free zone arrangement are non-Community goods (apart from Community goods placed in a free zone with the view of benefiting from customs measures that apply upon exportation) which are under customs supervision, in any case. However, targeted information exchange between customs and tax administration could be envisaged in case of suspicion of tax fraud. Therefore, the Commission does not envisage taking any action in this respect. For direct taxation the main question would seem to be transparency. A transaction undertaken in a free port would in principle fall within the direct taxation system of the Member State where the free port is located. Where such a Member State provides preferential direct tax treatment for such transactions, this Member State would have to notify the measure to the EU Code of Conduct on Business Taxation which would have to assess its compatibility with the criteria of the Code. In addition, a notification to the Commission prior to entry into force of the measure is also required for State Aid purposes, when the measure constitutes state aid. The Commission will explore with Member States how customs and tax legislation interact in the particular case of customs-free ports.
In the field of VAT, in which the EU has exclusive competence, the Commission has opened negotiations for an EU agreement for administrative cooperation and recovery of claims with Norway. In the field of administrative cooperation, the Commission is also pursuing the objective of “one single European voice” in the OECD.
Regarding the additional measures to address the tax gap (ECON D1/ TAXE 113, 114,
123, 140, 167)
Regarding VAT administration (ECON D1/ TAXE 123), Article 12 of Council
Regulation 1553/89 on the definitive uniform arrangements for the collection of own resources accruing from VAT requires the Commission to submit a report to the European Parliament and the Council every three years on the procedures applied in the Member States for registering taxable persons and determining and collecting VAT, as well as on the modalities and results of their VAT control systems. Within this framework, the Commission will therefore continue to evaluate the functioning of Member States’ VAT administration in order to stimulate improvements, continue to facilitate the exchange of information on administrative practices and identify best practices, support Member States in their efforts to modernise VAT administration and enhance compliance and facilitate the provision of technical assistance to requesting Member States. In order to make the VAT regime really tailored to the Single Market and make it simpler, more robust and fraud-proof, in March 2016 the Commission will adopt an Action Plan on VAT.
Tax compliance and the efficiency of tax administrations are also monitored in the context of the European Semester.
No initiatives on tax amnesties (ECON D1/ TAXE 167) are envisaged at this stage. Tax amnesties are a matter of national competence, and such schemes show significant specificities and differences from one Member State to another. The national economic context in which such schemes are adopted also varies greatly across the EU. Therefore, EU-wide coordination or harmonisation could be very difficult and have little added value.
Certain provisions arising from the revised Recommendations of the Financial Action Task Force (FATF) have been integrated in the recently adopted 4th Anti-Money Laundering Directive (2015/849). Concretely, this Directive requires information on beneficial ownership for companies (ECON D1/ TAXE 113, 114, 140) including details of the beneficial interests, to be held by the company and, in addition, in central registers, such as commercial registers or companies’ registers or public registers; different levels of access are to be granted. A similar provision also deals with beneficial ownership information regarding trusts and other similar legal arrangements. Now it is up to the Member States to swiftly transpose the Directive and make it work. The Commission is also preparing a Communication which will consider extending anti-money laundering actions to explicitly tackle terrorist financing.
Regarding the call for the Commission to fully implement the EU Ombudsman’s recommendations regarding the composition of expert groups (TAXE 129) (This concerns the IVA’s membership for example of the VAT Expert Group and VAT Forum)
The Commission is preparing new horizontal rules on expert groups, responding positively to Parliament’s requests and to many suggestions submitted by the Ombudsman and the Parliament. These new rules, which fully reflect the line taken by First Vice-President Timmermans in his letter to the European Ombudsman of May 2015 in response to her inquiry on expert groups, will in particular include the following measures:
– New rules will reconfirm the Commission’s commitment to strive for a balanced composition of expert groups. When defining the composition of these groups, the Commission and its departments shall aim at ensuring, as far as possible, a balanced representation of relevant areas of expertise and areas of interest, as well as a balanced representation of gender and geographical origin, while taking into account the specific tasks of every particular expert group, the type of expertise required and the response received to calls for applications.
– As requested by Parliament and the Ombudsman, in order to select expert group members, the Commission will introduce mandatory public calls for applications including the mandate of the groups concerned, except when members of expert groups are public authorities. Such calls shall be published on the Register of expert groups. This will be a visible move to make selection procedures more transparent and inclusive, and thereby also contribute to balanced composition of expert groups.
– As requested by Parliament, the Commission will improve conflict of interest management in relation to experts appointed in a personal capacity, who are due to act independently and in the public interest. In particular, new provisions will be approved introducing a definition of “conflict of interest” and providing for a specific conflict of interest assessment and management to be performed by all Commission services concerned, on the basis of detailed standard declarations of interests to be completed by experts. These declarations shall be published on the Register of expert groups.
– As requested by the Parliament and the Ombudsman, the Commission will enhance transparency by releasing a new version of the Register of expert groups reflecting the above measures and ensuring publication of relevant documents produced by expert groups. In this context, for the first time synergies between the Register of expert groups and the Transparency Register will be ensured; for example, registration on the Transparency Register will be required in order for stakeholder organisations and individual experts representing a common interest to be appointed as expert group members, or to be able to continue to be members of expert groups, if appointed before the adoption of the new rules. Furthermore, the availability and reliability of data published on the Register of expert groups will be improved, inter alia by introducing a meaningful and more accurate classification of members.
These positive developments clearly signal the Commission’s determination to improving the management of its expert groups.
Commission launches feasibility study on the development of an EU VAT web portal – 18 March 2016
The European Commission has launched a consultation on the development of an EU VAT web portal. The web portal would provide a single access point for consulting VAT rules and procedures that apply across the EU. The development of the portal is based on a three-step approach. First, a VAT portal for the Mini-One-Stop-Shop (MOSS) was launched. Currently, the information in the MOSS portal is being updated and improved. As a last stage, the Commission intends to extend the portal gradually by adding new topics and to establish a comprehensive VAT portal. The questionnaire itself asks potential users of such an EU VAT web portal for views on the relevance of various VAT related topics in the portal as well as more practical questions on its usage and user-friendly functioning.
VAT fraud in the food industry – 18 March 2016
The European Commission has replied to a question asked by the MEP Jeppe Kofod (S&D/DEN) with regard to VAT fraud in the food industry. In his question, Mr. Kofod points to statistics demonstrating an increasing number of VAT frauds in Denmark’s food industry, and asks the Commission how it will address this form of fraud in its VAT Action Plan, and whether in line with the TAXE I Committee’s demands will establish stricter penalties and for tax and VAT fraud. In his reply, Commissioner Moscovici lists measures and initiatives that the Commission has taken in the Eurofisc network context to address VAT fraud. He moreover confirms that the VAT Action Plan will “strengthen the VAT system”. With regard to penalties, Commissioner Moscovici confirms that the Commission will launch a study on the impact of national sanction systems on tax compliance.
VAT fraud – 22 March 2016
The European Commission has replied to a question asked by the MEP Barbara Kappel (ENF/FRA) with regard to VAT fraud. In her question, Ms. Kappel refers to carousel fraud as well as the desire of the Czech Republic to apply the reverse charge mechanism nationally in order to tackle against it. She therefore asks the Commission what is its view with regard to the reverse charge model, and what alternatives it is planning. In his reply, Commissioner Moscovici confirms that the Commission will address VAT fraud in its upcoming VAT Action Plan. In its dialogue with Member States, a number of options, including a generalised reverse charge mechanism, have been considered. The Commission however does not plan to put forward specific legislation for a sector-specific application of the reverse charge mechanism. In terms of alternatives, the Commissioner brings up the European Commission’s provision of technical assistance to Member States, the use of better IT tools, exchange of good practices and improving access to information.
“EU referendum: how would Brexit change VAT and import duties?” – 22 March 2016
As part of its “EU referendum panel”, the Guardian has published responses by four tax experts to a reader’s question concerning the potential impact of a Brexit on VAT and import duties. The question asks what would change in the case of a Brexit for a company that manufactures shoes in Spain. All experts reply that in the case of a Brexit the company in question would be subject to greater costs and compliance requirements.