Taxamo has published an article focusing on the VAT implications of Brexit on the EU. The article is organised in a Q&A format, and attempts to address questions such as the implications on digital service …
“Brexit: what does it mean for digital VAT in the EU?” – 27 June 2016
Taxamo has published an article focusing on the VAT implications of Brexit on the EU. The article is organised in a Q&A format, and attempts to address questions such as the implications on digital service providers, options for non-EU businesses, and the Mini One Stop Shop (MOSS) registration.
Four tax opinions submitted by the REFIT Platform – June 2016
The Commission’s REFIT Platform has submitted four opinions in the area of tax. They focus on reverse liability, VAT information portal, standard VAT declaration and intra-community trade, respectively. The purpose of the REFIT Platform is to assess the merits of stakeholders’ contributions and suggestions on EU policies, and to look at “practical ways” to follow up on these suggestions. The Commission has no legal obligation to follow the Platform’s proposed course of action, but has to publicly indicate whether or not it will do so, and why. The REFIT Platform consists of representatives from the Commission, from each Member State as well as stakeholder and industry groups.
Cash accounting method of paying taxes as an instrument to strengthen financial liquidity, especially for SMEs in the EU – 7 July 2016
The European Commission has replied to a question asked by the MEP Adam Szejnfeld (EPP/POL) with regard to cash accounting method of paying taxes. In his question, Mr. Szejnfeld emphasises the potential benefits for companies of being able to use cash accounting when determining the tax to be paid. He consequently asks the Commission whether it is considering “legislative steps” to change the current legal provisions that require tax to be paid in accordance with the accrual method. In his reply, Commissioner Moscovici points out that the VAT Directive already provides for the possibility of using cash accounting under certain circumstances, optional for Member States and “widely applied”. Moreover, the Commission will put forward a proposal by the end of 2017 to review the special scheme for SMEs under the VAT Directive. This review will entail simplification measures, possibly including streamlining the provisions on cash accounting.
Rules governing tax on goods and services – 14 July 2016
The European Commission has replied to a question asked by the MEP Jarosław Wałęsa (EPP/POL) with regard to rules governing tax on goods and services. In his question, Mr. Wałęsa refers specifically to VAT fraud by companies, and asks the Commission what measures it will take to address this issue and to ensure a level-playing field on the Single Market. In his reply, Commissioner Moscovici lists the measures it has already taken to tackle corporate tax fraud, including the Anti-Tax Avoidance Directive (ATAD). Moreover, he states that the upcoming re-launch of the Common Consolidated Corporate Tax Base (CCCTB) will further address the issue.
With regard to VAT specifically, Commissioner Moscovici states that EU legislation already provides ample tools to fight against fraud, and re-iterates Commission commitments to further improve administrative cooperation between relevant Member State authorities.
Commission launches consultation on VAT for e-publications – 25 July 2016
The European Commission has published a public consultation on reduced VAT for e-publications. The consultation forms a part of the Digital Single Market project on the one hand, and Commission efforts to revamp the EU VAT system, as defined in the VAT Action Plan, on the other. The Commission made a commitment in its VAT Action Plan to put forward a legislative proposal in 2016 to allow Member States to apply the same VAT rates that they currently apply to printed publications on equivalent e-publications as well. To support such a proposal, the consultation seeks views on:
- Allowing Member States the application of reduced rates for electronically supplied publications;
- Allowing Member States the application of super-reduced and zero rates for electronically supplied publications;
- The definition and scope of electronically supplied publications;
- The potential impacts of reduced rates for electronically supplied publications.
In terms of next steps, the deadline for submitting answers is 19 September. A legislative proposal on VAT obstacles to cross-border e-commerce is to be expected for winter 2016. In parallel, the Commission Vice-President Andrus Ansip responsible for the digital agenda has pledged that no additional tax burdens will be imposed on small businesses as a part of the digital reforms.
Commission publishes paper on the French VAT system and revenue efficiency – 25 July 2016
The European Commission has published a paper on the French VAT system and its revenue efficiency. It focuses, in particular, on use of reduced VAT rates in France and its implications for revenue efficiency. It argues that the system’s efficiency is visibly and negatively affected by the number of reduced rates and exemptions, and recommends action for France to improve its VAT rate structure.
MEP Questions & Answers
VAT accounting periods – 22 July 2016
The European Commission has replied to a question asked by the MEP Julia Pitera (EPP/POL) with regard to VAT accounting periods. In her question, Ms. Pitera asks the Commission how long the VAT accounting periods are in each Member States, whether the Commission has conducted studies linking VAT accounting periods to the scale of tax fraud, and to what degree shortening the tax period to once per month would cause additional administrative burdens for businesses. In his reply, Commissioner Moscovici states that the VAT period must be set by Member States at one, two or three months, but different periods can be established as long as these do not exceed one year. The Commission has, moreover, looked into the impacts of a common EU standard VAT return, which provides an overview of filing periods per Member State (link to the study is available from the Commission answer). Most Member States require monthly returns, except Cyprus, Malta and the UK which have quarterly reporting. The study, furthermore, indicates potential savings of €1,8 billion when moving from monthly to quarterly reporting, and there is a need to reduce the frequency of filing VAT returns for “smaller businesses”. Commissioner Moscovici finally confirms that the expected SME simplification package as announced in the VAT Action Plan and expected for 2017 the anti-fraud dimension and easing administrative burdens will be taken into account.
VAT exemption – 26 July 2016
The European Commission has replied to a question asked by the MEP Neoklis Sylikiotis (GUE-NGL/CYP) with regard to VAT exemptions. In his question, Mr. Sylikiotis asks the Commission whether all Member States, on top of Cyprus, impose VAT on sales and transfers of immovable property and if not, which of them are exempt from the provisions of the VAT Directive. In his reply, Commissioner Moscovici states that the supply of immovable property is taxable. However, an exemption may apply after first occupation of a building and of land other than building land. He moreover elaborates that the supply (before first occupation) of a building or building land is subject to VAT in all Member States except Belgium, Germany, Greece, Luxembourg, Malta, Austria, Portugal, Finland, Sweden, and the UK.
Effect on competition of deferring VAT on imports into Spain – 2 August 2016
The European Commission has replied to a question asked by the MEP Izaskun Bilbao Barandica (ALDE/SPA) with regard to the competition implications of deferring VAT on imports into Spain. In her question, Ms. Bilbao Barandica refers to a Spanish scheme for compensating import VAT which has caused legal issues due to the scheme’s suspected discriminatory nature. According to the scheme, only those taxpayers who pay VAT other than import VAT to the central tax authority are able to benefit from the scheme, even though all taxpayers are obliged to pay import VAT to the tax authority. The scheme is suspected to be in violation of EU state aid rules. Ms. Bilbao Barandica asks the Commission what action it will take with regard to the case. In her reply, Commissioner Vestager confirms that the Commission received a complaint on the matter in February 2015, and emphasises the complexity of the issue given that it concerns national and regional fiscal competencies. The Commission is currently assessing information on the case and can therefore not disclose further details yet.
VAT Directive review – 4 August 2016
The European Commission has replied to a question asked by the MEP Deirdre Clune (EPP/IRL) with regard to the review of the VAT Directive. In her question, Ms. Clune asks the Commission to clarify when it intends to carry out a review of the coverage of Annex III of the Directive, so that the provision may be extended to defibrillators and “other life-saving equipment”. In his reply, Commissioner Moscovici refers to a planned 2017 proposal on VAT rates, announced earlier in the VAT Action Plan, which could include an extension of the list of goods and services eligible for reduced rates. When and what the Commission will propose depends, according to the Commission, on the choices made by the Member States themselves in the Council.