Commission to evaluate reporting burdens under DAC
On 17 October, the European Commission (EC) released its 2024 work programme, offering a preview of the upcoming year’s initiatives.
The programme makes several references to outstanding tax proposals in both direct taxation and VAT. Interestingly, the programme also indicates EC’s intention to evaluate the Directive on administrative cooperation (DAC) under its efforts to reduce reporting burdens of EU legislation. However, no timeline is indicated for this evaluation exercise.
EU VAT gap report 2023
EC’s latest VAT gap report, published on 24 October, indicates that most EU Member States made progress in the enforcement of VAT compliance in 2021. The study shows that Member States lost around €61 billion in VAT in 2021, compared to €99 billion in 2020.
This figure represents revenues lost mainly to VAT fraud, evasion and avoidance, non-fraudulent bankruptcies, miscalculations and financial insolvencies, among other drivers.
The 2023 report shows that while some revenue losses are impossible to avoid, targeted policy responses seem to have made a difference, particularly those related to digitalisation of tax systems, real-time reporting of transactions and e-invoicing. At the same time, temporary factors such as government support measures implemented during the COVID-19 pandemic, which were often contingent on paying taxes, may also have played a role in driving this positive change.
ECON adopts VAT in the Digital Age opinion
And finally, ECON adopted on 24 October its opinion on the VAT in the Digital Age (ViDA) proposal prepared by MEP Olivier Chastel (RE/Belgium). The opinion is divided into 2 separate draft reports available here and here.
The draft report on the proposal for a Regulation was adopted, as amended, by unanimity with 53 votes in favour. The draft report on the proposal for a Directive was adopted, as amended, with 47 votes in favour and 5 abstentions.
A final Plenary vote is currently set for 20 November for both reports. EP’s opinion is non-binding, but it is nonetheless needed for ViDA to become EU law.
MEPs support simplified procedure for VAT special scheme
ECON Committee met on 24 October for a consideration of draft report and decision on procedure regarding the EC proposal on VAT rules for taxable persons who facilitate distance sales of imported goods and the application of the special scheme for distance sales of goods imported from third countries, and special arrangements for declaration and payment of import VAT.
The proposal aims to further adapt the EU VAT framework by expanding the range of supplies covered by the Import One Stop Shop (IOSS), Special Arrangements and deemed supplier regime by removing the EUR 150 threshold, which currently limits their application and effectiveness. Therefore, the IOSS could be used to declare and remit the VAT due on all distance sales of imported goods into the EU, irrespective of their value, but not including products subject to excise duties, which remain excluded from the scheme. This proposal also aims to reduce compliance costs for businesses and create a level playing field for sellers operating online.
At the meeting, every MEP who spoke agreed to move forward with a streamlined process for this file, no amendments. The final Plenary vote is set for 20 November.
MEP Questions & Replies
EC still plans to issue recommendation on taxpayers’ rights “at a later point in time”