Intra-EU supplies – proof Cross border rulings - pilot 15 October Stephen Dale - Partner

2 15 October 2014 PwC Agenda Proving intra-EU supplies – mission impossible? Cross border rulings pilot project – how to make a great idea work 2PwC

Intra-EU supplies – proof Article 138 Directive 2006/112/EC

4 15 October 2014 PwC EU Trends - VAT Gap is increasing: EUR 193 Billion in 2011 or 1,5 % of the GDP Source: Study to quantify and analyse the VAT Gap in the EU-27 Member States - TAXUD/2012/DE/316 - FWC No. TAXUD/2010/CC/104 4PwC EU-26 VAT Gap (Percent of GDP)

5 15 October 2014 PwC EU Trends - VAT Gap is increasing: EUR 193 Billion in 2011 or 1,5 % of the GDP Source: Own calculations - Study to quantify and analyse the VAT Gap in the EU-27 Member States - Final Report - TAXUD/2012/DE/316 - FWC No. TAXUD/2010/CC/104 5PwC

6 15 October 2014 PwC EU Trends - VAT Gap is increasing: EUR 193 Billion in 2011 or 1,5 % of the GDP Source: Study to quantify and analyse the VAT Gap in the EU-27 Member States - TAXUD/2012/DE/316 - FWC No. TAXUD/2010/CC/104

7 15 October 2014 PwC EU Trends: Evolution of average standard VAT rate compared to average corporate income tax rates Taxation trends in the European Union 7PwC

8 15 October 2014 PwC Proof of intra-EU supplies 8PwC Article Member States shall exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the Community, by or on behalf of the vendor or the person acquiring the goods, for another taxable person, or for a non- taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods began. 2.Cases C-587/10 VSTR C-273/11 Mecsek-Gabona, C-409/04 Teleos C-184/05 Twoh C-492/13 Traum C-271/06 Netto C-80/11 and C-142/11 Mahageben, C-439/04 Kittel “ knew or should have known” C-146/05 Collee

9 15 October 2014 PwC What kinds of proof? Contracts? Third party certification? Invoices? Purchase orders? Payments from foreign bank accounts? CMR – signed? Goods received notes – signed? KYC/KYS and your taxpayer? Other?

10 15 October 2014 PwC Issues of concern/way forward Issues of concern Ex-works supplies? Transfers of stock? Consignments? Chain transactions? Triangular trades? Other? Way forward TABECFAF – VAT Forum - MOU VAT Expert Group More litigation at the CJEU

Cross border rulings - pilot

12 14 October 2014 PwC EU Trends - Cross-border rulings – EU Pilot Unilateral and bilateral rulings EU Pilot MS Belgium Cyprus Estonia France Hungary Latvia Lithuania Malta Portugal Slovenia Spain The Netherlands UK Sweden Finland Countries with unilateral rulings Countries with unilateral rulings and part of the EU Pilot on x-border rulings Country with no unilateral rulings and part of the EU Pilot on x- border rulings: MT Countries with no unilateral rulings: BU, CR, LU, AT, SK From 1 June 2013 to 31 December 2014 FAQ’s File before 31 December Mid-term review in progress 15 October 2014

13 14 October 2014 PwC What needs to be done to make the project a success? Data provided in a CBR request may be shared by the tax authorities of the Member States concerned. Consultations between the competent authorities of the Member States concerned will only take place if this is requested explicitly by the taxable person making the CBR request. Consultation does not guarantee that a CBR will be delivered as the Member States involved may not agree. The Commission has indicated – subject to available agenda time – an intention to raise cases where the Member States cannot agree with the VAT Committee under article 398 of Directive 2006/112/EC. CBRs will only be given under the same conditions as national rulings and decisions. This means that if in a Member State a ‘ruling’ is not binding then neither will a CBR be. No CBR will be given where the person concerned is being audited. The time limits for responding to a CBR request are those applying to national rulings. This means that the process can be lengthy. EU Trends - Cross-border rulings – EU Pilot 15 October 2014

14 14 October 2014 PwC What types of CBR request have been made to date?  training courses/conferences  sales of SIM cards and ‘top ups’  repairs to property  separate supplies of machinery and tyres Next steps - meeting  how to continue the project (assuming that it is continued)  involving other Member States  differences in Member States’ treatment of CBR requests, as a result of national ruling conditions  timescales for CBR requests and replies EU Trends - Cross-border rulings – EU Pilot 15 October 2014

15 14 October 2014 PwC VAT in the EU - the EU Commission’s strategy Destination principleSimpler VAT systemEfficient VAT systemRobust and fraud proof Assessment current VAT rate structures Proposal on new VAT rate structure Proposal for definitive regime Review and analysis of destination principle Proposals for broadening the tax base – including proposal on public bodies Proposal for standardized VAT return Broadening the one-stop-shop arrangement Introduction of mini one-stop-shop arrangement “Art.12” Report Report back on anti-fraud measures Quick-reaction mechanism Feasibility of cross-border audit team and broadening of automated access to information Further investigation of new tax collection methods and SAF-T Publication of VAT Committee guidelines and explanatory notes on new legislation before the new rules enter into force creation of an EU VAT web portal Consultation with business/MS study on standardized VAT return LULVITGRLTIECYDK EU Presidency Standardization of other VAT obligations, such as registration and invoicing PwC 15 October 2014

16 14 October 2014 PwC VAT Expert Group (Experts advising EU Commission – Stephen Dale) Group on the Future of VAT (Member States and EU Commission) VAT Forum (Business experts, Member States – facilitated by the Commission – Stephen Dale). The European Commission’s consultation process Consultation process with business and M/S 16PwC 15 October 2014

17 14 October 2014 PwC Stephen Dale Indirect Tax partner Landwell & Associés Direct: Thank you This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers International Ltd its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2014 Landwell & Associés. All rights reserved. In this document, “Landwell “ refers to Landwell & Associés, correspondent law firm of the international network of independent firms of PricewaterhouseCoopers. 15 October 2014