The European Commission VAT Expert Group has issued its views on the VAT Action Plan published on 7 April (please refer to the FEE Tax Policy Update from 15 April for further details) …
Commission guidance: The basic EU VAT rules for electronically supplied services explained for micro businesses – 20 May 2016
The European Commission has published guidance for microbusinesses on the basic EU VAT rules applicable to electronically supplied services. The guidance document provides clear and concise instructions for the applicability of specific provisions in a variety of different VAT situations that such microbusinesses may face, and includes an extensive section on how to comply with VAT obligations.
Opinion of the VAT Expert Group on the Action Plan on VAT – Creating a definitive regime – 20 May 2016
The European Commission VAT Expert Group has issued its views on the VAT Action Plan published on 7 April (please refer to the FEE Tax Policy Update from 15 April for further details). Of particular interest, the opinion of the Group endorses a Single European VAT Area based on the destination principle, and calls on the Commission and Member States not to endorse Member State specific approaches to VAT (such as the local application of a generalised reverse charge mechanism) as this might hinder the development of a “coherent, harmonized and fraud proof VAT system” in the EU.
ECON Committee discussion on definitive VAT regime report – 24 May 2016
The ECON Committee of the European Parliament has held a first exchange of views on the draft own-initiative report on the definitive VAT regime and combatting VAT fraud. The report has been prepared by the MEP Werner Langen (EPP/GER) (for further details on the report, please refer to the FEE Tax Policy Update from 13 May).
During the ECON debate, a number of MEPs highlighted that the highest priority of the Commission VAT reform should be to tackle VAT fraud. Several representatives across political Groups moreover criticised the unanimity rule in the Council on VAT and on taxation in general, defended the reverse charge mechanism as a viable option, and overall expressed particular concerns for SMEs, emphasising that the VAT system must be made simpler, less costly and easier to comply with. At the end of the meeting, Mr. Langen endorsed the prospect of organising a Committee hearing on the potential impacts of a reverse charge system. In terms of next steps, the deadline for amendments is 31 May. The vote in the ECON Committee is scheduled for 13 July, whilst a Plenary vote is expected for 5 September.
VAT – 13 May 2016
The European Commission has replied to a question asked by the MEP Jane Collins (EFDD/UK) with regard to VAT. In her question, Ms. Collins argues that the 5% VAT on tampons is in contradiction of gender equality. In her reply, Commissioner Jourova (justice, consumers, gender equality) states that the policy on reduced rates is a Member State competence, within the frames of EU law.
VAT on digital books, newspapers and periodicals – 13 May 2016
The European Commission has replied to a question asked by the MEP Henna Virkkunen (EPP/FIN) with regard to VAT on digital publications. In her question, Ms. Virkkunen asks the Commission what action has it taken to harmonise VAT treatment of electronic books, periodicals and newspapers and their printed counterparts, and when will the Commission submit a proposal enabling Member States to apply reduced VAT rates on digital publication. In his reply, Commissioner Moscovici confirms that the Commission will put forward such a proposal by the end of 2016, and the Commission is planning to amend the VAT Directive in a way that Member States could align the VAT treatment of digital and printed publications.
VAT fraud in the EU – 24 May 2016
The European Commission has replied to a question asked by the MEP Zigmantas Balcytis (S&D/LIT) with regard to VAT fraud in the EU. In his question, Mr. Balcytis asks the Commission whether it will establish an “adequate system” intended for VAT data collection from Member States, and whether strengthening OLAF’s powers is necessary in order to better fight VAT fraud. In his reply, Commissioner Moscovici notably points out that the Commission does publish data on the VAT gap, and has established a working group to look into the methodologies and other details of VAT data collection.
Council approves extension of 15% minimum standard VAT rate and CBCR between tax administrations – 25 May 2016
As expected, the EU Finance Ministers have approved the Commission proposal for Country by Country Reporting (CBCR) between tax administrations, as an amendment to the Administrative Cooperation Directive. There were no great surprises, as Member States agreed on the final form of the text with minor amendments to the initial Commission proposal. On the same occasion, the Finance Ministers also agreed to extend the minimum standard VAT rate of 15% until December 2017.
Council issues views on the VAT Action Plan – 25 May 2016
The EU Finance Ministers have issued conclusions on the VAT Action Plan proposed by the Commission in April. The Council position provides a mandate for the Commission to pursue the legislative initiatives it listed in the Action Plan.
The Council conclusions entail a number of items of particular interest. For example, conclusions express support for improving administrative cooperation between tax administrations; highlights the potential usefulness of temporary derogations to the VAT system in order to gather data on options (such as the pilot project on a generalised reverse charge mechanism requested by Czech Republic but seen with scepticism by the Commission); emphasises that the ultimate objective should be that cross-border VAT compliance costs are brought closer to the levels of those in domestic trade whilst being mindful of fraud; expresses (unsurprisingly) support for the destination principle, but considers a cross-border reverse charge as a viable option; and finally, with regard to the proposed reform of the VAT rates system, the conclusions call on the Commission to present by the end of 2016 a legislative proposal on VAT rates for e-publications, as well as a legislative proposal to enable reduced or zero VAT rates for women’s sanitary products as soon as possible (this is a current concern in the UK, and the call can be interpreted as an effort to support the British Government’s efforts against a Brexit).
Preliminary ruling on VAT exemption for transactions concerning payments and transfers – 26 May 2016
The Second Chamber of the Court of Justice of the EU (CJEU) has issued a preliminary ruling on the application of VAT exemptions on transactions related to payments and transfers – case C-130/15. In the ruling, the Court establishes that the VAT exemption normally applicable to transactions concerning payments and transfers does not apply to services described as “processing of payment by debit or credit card”. The case concerned the refusal of the UK’s HMRC to reimburse VAT which the National Exhibition Centre (NEC) claimed it paid unduly on the supply of certain services.
E-commerce imports into Europe: VAT and customs treatment – 4 May 2016
According to a new report published by Copenhagen Economics, a total of €1,3 billion in public income is lost each year in the EU due to a lacking collection of VAT and customs duties for goods purchased online and imported by national postal services of EU Member States. The report argues that VAT is collected on only 35% of items imported via Postal operators.