The EU Commission has just launched a questionnaire/consultation, which is one of the last deliveries of the 2016 VAT Action Plan. It complements the recently adopted VAT Digital Single Market Package (5 December 2017). The latter simplified VAT rules for cross border business to consumers (B2C) supplies, while this initiative is about the administrative cooperation tools for the competent tax authorities to detect and control VAT non-compliant sellers trading online.
European Commission
The EU Commission has just launched a questionnaire/consultation, which is one of the last deliveries of the 2016 VAT Action Plan. It complements the recently adopted VAT Digital Single Market Package (5 December 2017). The latter simplified VAT rules for cross border business to consumers (B2C) supplies, while this initiative is about the administrative cooperation tools for the competent tax authorities to detect and control VAT non-compliant sellers trading online.
Who should respond to the questionnaire
The fight against VAT fraud on cross-border online sales to final consumers involve different stakeholders: the tax authorities in EU countries, payment intermediaries, online sellers, other businesses and citizens / consumers. Interested organisations, institutions and public authorities as well as academic researchers are also invited to provide their views on this matter.
Some questions are mainly addressed to stakeholders with expert knowledge but all questions are open to all stakeholders.
Tax authorities and payment intermediaries will be invited to express their opinion via a specific questionnaire, during the month of March 2018. In the same period, SMEs will be invited to express their opinion through the “Enterprise Europe Network” – https://een.ec.europa.eu/about/contact.
Objective of the consultation
This consultation aims at collecting different stakeholders’ opinion on:
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the problem of VAT fraud in the field of e-commerce (business to consumers cross-border sales of goods and service) and its EU dimension;
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whether the current EU legal framework to fight VAT fraud provides the tax authorities in EU countries with the proper tools to fight VAT fraud in the field of e-commerce;
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whether a EU harmonised approach could provide for better tools to tax authorities in EU countries to fight the VAT fraud in the field of e-commerce;
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the impact of the different policy options in terms of fighting fraud, regulatory costs and individuals rights, including issues of privacy and protection of personal data.
Commission to look into Exchange of VAT relevant payment data, launches public consultation – 15/27 February 2018
The European Commission is planning legislative measures in the area of exchange of VAT relevant payment data.
The Commission aims, in particular, to provide tax administrations with appropriate tools to detect fraudsters and control VAT liabilities on cross-border B2C ecommerce supplies by tracking the money flow. The Commission also seeks to ensure a level playing field for businesses and adequate data protection for any VAT-relevant payment data concerned.
Later in February, the Commission launched a public consultation in order to gather stakeholder feedback on this initiative. The deadline for responding to the consultation is 25 April.
The consultation seeks stakeholder input especially on:
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the problem of VAT fraud in the field of e-commerce (B2C cross-border sales of goods and service) and its EU dimension
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whether the current EU legal framework to fight VAT fraud provides the tax authorities in EU countries with the proper tools to fight VAT fraud in the field of e-commerce
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whether a EU harmonised approach could provide for better tools to tax authorities in EU countries to fight the VAT fraud in the field of e-commerce
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the impact of different policy options in terms of fighting fraud, regulatory costs and individuals rights, including issues of privacy and protection of personal data
European Parliament
European Parliament formally establishes new tax Committee – 1 March 2018
The European Parliament has voted in a single vote to set up a special committee on tax.
The Committee will have a wide mandate, including financial crime, tax evasion and avoidance, VAT, golden visas, Brexit (as emphasised, notably, by the EPP Group), and more. It is to consist of 45 members and have a mandate of 12 months. Details on the balance of powers, membership and rapporteurship will become available shortly.
Court of Justice of the EU – Rulings
C‐628/16: VAT on successive supplies of the same goods – 21 February 2018
The Ninth Chamber of the CJEU has ruled that the first paragraph of Article 32 of the VAT Directive must be interpreted as meaning that it applies to the second of two successive supplies of the same goods which gave rise to only one intra-Community transport.
Moreover, where the second supply in a chain of two successive supplies involving a single intra- Community transport is an intra-Community supply, the principle of the protection of legitimate expectations must be interpreted as meaning that the person ultimately acquiring the goods, who wrongly claimed a right to deduct input VAT, may not deduct, as input VAT, the VAT paid to the supplier solely on the basis of the invoices provided by the intermediary operator which incorrectly classified its supply.
C‐182/17: VAT on the supply of services – 22 February 2018
The Seventh Chamber of the CJEU has ruled that the VAT Directive must be interpreted as meaning, subject to verification of the relevant facts by the referring court, that an activity whereby a company performs certain public tasks under a contract concluded between that company and a municipality, constitutes a supply of services effected for consideration and subject to VAT under that provision.
Furthermore, Article 13(1) of the VAT Directive must be interpreted as meaning that, subject to verification of the relevant matters of fact and national law by the referring court, an activity whereby a company performs certain public municipal tasks under a contract concluded between that company and a municipality, does not fall within the scope of the rule of treatment as a non- taxable person for VAT purposes laid down by that provision, if that activity constitutes an economic activity within the meaning of Article 9(1) of that Directive.
C‐396/16: Debtor’s obligations and VAT deductions – 22 February 2018
The First Chamber of the CJEU has ruled that Article 185(1) of VAT Directive must be interpreted to the effect that the reduction of debtor’s obligations resulting from the final approval of an arrangement with creditors constitutes a change in the factors used to determine the amount to be deducted, for the purposes of that provision.
Moreover, the first subparagraph of Article 185(2) must be interpreted to the effect that the reduction of a debtor’s obligations resulting from the final approval of an arrangement with creditors does not constitute a case of a transaction remaining totally or partially unpaid that does not give rise to an adjustment of the initial deduction, where that reduction is definitive, although that is a matter for the referring court to determine.
And finally, the second subparagraph of Article 185(2) must be interpreted to the effect that, in order to implement the option provided for in that provision, a member state is not required to make express provision for an obligation to adjust the deductions in the case of transactions remaining totally or partially unpaid.
C‐387/16: Deduction of input tax – 28 February 2018
The Fourth Chamber of the CJEU has ruled that Article 183 of VAT Directive, read in the light of the principle of fiscal neutrality, must be interpreted as precluding a reduction in the amount of interest normally payable under national law on overpaid VAT which was not refunded in due time for reasons connected to circumstances not attributable to the taxable person, such as the high amount of that interest when compared with the amount of the overpaid VAT, the period of time during which the overpayment was not refunded and the underlying reasons for this, as well as the losses actually incurred by the taxable person.
C‐307/16: tax exemptions on exports – 28 February 2018
The Fifth Chamber of the CJEU has ruled that Article 131, Article 146(1)(b) and Articles 147 and 273 of the VAT Directive must be interpreted as precluding national legislation under which, in the context of a supply of goods for export to be carried in the personal luggage of travellers, the vendor, a taxable person, must have attained a minimum level of turnover in the preceding tax year, or have concluded an agreement with a person authorised to refund VAT to travellers, where the mere failure to meet those conditions results in the definitive loss for the vendor of the exemption in relation to that supply.
C-672/16: VAT deductions and the use of property – 28 February 2018
The Seventh Chamber of the CJEU has ruled that Articles 167, 168, 184, 185 and 187 of the VAT Directive must be interpreted to the effect that they preclude national legislation which provides for the adjustment of VAT initially deducted on the ground that a property, for which the right to opt for taxation was exercised, is regarded as no longer being used by the taxable person for the purposes of its own taxed transactions, where that property has remained unoccupied for more than two years, even though it is established that the taxable person has sought to rent it during that period.
International
South Africa proposes to increase VAT rate, subject more foreign electronic services to VAT – 21 February 2018
South Africa intends to propose its first VAT increase since 1993, with a raise from 14% to 15%. Furthermore, it is planned to widen the scope of foreign electronic services subject to VAT to include all services as defined in the VAT Act that are provided by means of an electronic agent, electronic communication, or the internet for any consideration. The proposal also makes changes to persons required to register, exclusions, and compliance.