Tag Archives: VAT

Commission Initiatives on VAT and E-Invoicing

The European Commission has launched two important initiatives respectively on VAT and E-Invoicing.

On VAT the Commission has published a green paper aiming at a public consultation with stakeholders. The main questions:

  • What would be the most suitable VAT arrangements for intra-EU supplies? Is taxation in the Member State of origin still a relevant and achievable objective?
  • Which of the current VAT exemptions should no longer be kept? Should VAT be applied to passenger transport irrespective of the means of transport used?
  • Should the current exemption scheme for small businesses be reviewed and what should be the main elements of that reassessment?
  • What changes should be introduced to improve the neutrality and fairness of the rules on deduction of input VAT?
  • What are the main problems with the current VAT rules for international services, in terms of competition and tax neutrality or other factors?
  • Which, if any, provisions of EU VAT law should be laid down in a Council regulation instead of a directive? Might guidance on new EU VAT legislation be useful even if it is not legally binding on the Member States?
  • Do the current rates structure creates major obstacles for the smooth functioning of the single market (distortion of competition), unequal treatment of comparable products, or leads to major compliance costs for businesses?

The Commission communication “Reaping the benefits of electronic invoicing for Europe” notes that the existing rules that govern e-invoicing in Europe are still fragmented along national lines and most of the potential of e-invoicing is still untapped. The Commission wants to see e-invoicing become the predominant method of invoicing by 2020 in Europe and sets the following priorities:

  • to ensure legal certainty and a clear technical environment for e-invoices to facilitate mass adoption;
  • to encourage and promote the development of open and interoperable e-invoicing solutions based on a common standard, paying particular attention to the needs of SMEs;
  • to support the uptake of e-invoicing by setting up organisational structures, such as national e-Invoicing fora and a European Multi-Stakeholder Forum.



Carbon Emissions Fraud: the Plot Thickens

It turns out that many – including people working at Germany’s biggest banks and energy firms, have been involved in carbon emissions credit VAT fraud.

Europol has estimated that in some countries, up to 90% of the whole market volume was caused by fraudulent activities.

This is obviously worrying. The Commission says that the newly introduced reverse charges will change the game. It is very important indeed to curb speculation, since the whole emission trading scheme can be seriously compromised if sufficient control mechanisms are not introduced right away.

Bulgarian Customs Explain Everything with EU Regulation

There was a ripple of discontent in Bulgaria over a recent change in customs rules that requires to pay VAT for import of goods over 15 EUR. A Bulgarian journalist, Elenko Elenkov, described in an article how he had to wait for 4 hours at the Bulgarian Custom’s Office in order to get two T-shirts.

The Customs responded that everything was due to relevant EU regulations. That, however, is NOT true.

First of all, art. 23 of Regulation(EC) No 1186/2009 setting up a Community system of reliefs from customs duty stipulates that “any consignments made up of goods of negligible value dispatched direct from a third country to a consignee in the Community shall be admitted free of import duties”. In para. 2 it is said that “‘goods of negligible value’ means goods the intrinsic value of which does not exceed a total of EUR 150 per consignment”.

Second, as for the EORI registration I would like to remind the Bulgarian customs officials that the EORI guidelines specifically say that the Member States should take measures to reduce the burdens placed on economic operators as a result of introduction of the EORI system.

One problem is missing in Mr. Elenkov article, and that is the rampant corruption of Bulgarian customs officials. But then, in order to sell corruption, you need to complicate procedures first, right?

Correction: the exemptions from VAT for imports are regulated in Directive 2009/132/EC determining the scope of Article 143(b) and (c) of Directive 2006/112/EC as regards exemption from value added tax on the final importation of certain goods.

Art. 23 says:

“Goods of a total value not exceeding EUR 10 shall be exempt on admission. Member States may grant exemption for imported goods of a total value of more than EUR 10, but not exceeding EUR 22.

However, Member States may exclude goods which have been imported on mail order from the exemption provided for in the first sentence of the first subparagraph.”

A Common European Income Tax?

EurActiv reports on some budget drafts for the 2014-2020 financial framework. The really interesting part is the hinted idea of replacing current budget resources (mainly from VAT) with something that might be called European income tax. One of the considerations of the Commission appears to be that the financing of the EU budget from VAT is incomprehensible for the European citizens.

A bold idea indeed.

Proposal on VAT Tax Coordination

The European Commission adopted a proposal for a recast of the Regulation on administrative cooperation in the field of valued added tax, extending and reinforcing the legal framework for the exchange of information and cooperation between tax authorities.

One of the most novel elements in the proposal is the creation of Eurofisc. It is supposed to allow a very fast exchange of targeted information between all Member States as well as the setting up of common risk and strategic analysis.

The Recast regulation sets out that Member States are jointly responsible for the protection of VAT revenues in all Member States.

Bulgaria in a Declaration against Reduced VAT Rates

In a joint declaration attached to the political agreement for new options for reduced VAT rates, Bulgaria, Germany, Denmark, Lithuania and Estonia called on other EU states to show restraint in applying reduced rates, since they lead to reduction of the tax base, artificial redistribution of employment without new jobs creation, and increase the administrative burden. The signatories of the declaration will not use the new option for reduced VAT rates

The argument is old, as we are reminded by Jean Quatremer. It is mainly between Germany and France, mainly on restaurant services. The question about the effectiveness of the reduced VAT rates remains under discussion.

Agreement on Reduced Vat Rates in Certain Sectors

The Council of the European Union has reached a political agreement on the option for member states to reduce VAT rates in certain sectors.

The sectors are small-scale services, restaurant services, and books.