EU VAT Recent developments - Update - Maryse VOLVERT European Commission

The Future of EU VAT The 2011 Communication lays down the fundamental features of the future VAT system: An EU system based on the destination principle: Doing business across the EU must be as simple and as safe as engaging in domestic activities Simple: A single set of simple, clear and modern rules and obligations Efficient and neutral: Restricted use of exemptions and reduced rates, equal rules governing the right of deduction Robust and fraud proof: Modern methods of collecting and monitoring VAT

State of play  Staff working document 29 October 2014 on the implementation of the definitive VAT Regime On 29 October 2014, the European Commission published ideas on how to ensure a simpler, more effective and more fraud-proof VAT system. See the staff working document (SWD 14/338), the press release (IP/14/1216) and the frequently asked questions (MEMO/14/607).SWD 14/338IP/14/1216MEMO/14/607 Result of work with VEG (VAT Expert Group – business and academics) and GFV (Group on the future of VAT – EU Member States) Identify possible options and their likely advantages and disadvantages Expert study ongoing

State of play Expert study results expected in May 2015 Conference June 2015, in Vienna Allow VEG and GFV to reflect together on the options examined, the conclusions of the Expert study and the possible way forward Way forward to be decided on basis of this work

State of play Communication by the Commission planned for 2016 – content : Setting out the main features of the definitive VAT regime for intra-EU trade to be proposed by the Commission (impact assessment required) The Communication will also present the views of the Commission as regards the adjustments to be made to the regime of VAT rates. These are linked to the definitive regime and it is therefore better to address the topics in the same framework

State of play Communication by the Commission planned for 2016 – objectives : trigger a debate in the Council and in the European Parliament give a new political impetus at ministers' level to encourage tax administrations representative's to take this file further before the Commission tables any concrete legislative proposal

On-going work Proposals on the table of the Council Vouchers Standard VAT declaration Financial services Future work Broader One Stop Shop Web portal Public bodies Passenger transport SMEs

On-going work Vouchers Under discussion Progress being made but still some way to go Standard VAT declaration Under discussion in Council Still not ripe for compromise Financial services Not currently under discussion At a stand-still

2017 changes : services connected with immovable property Basic legislation in place since 1977 updated in 2010 Detailed implementing regulation adopted in 2013 will enter into force on 1 January 2017 Preparation of explanatory notes First preliminary discussion with representatives of EU tax administrations and businesses took place in Madrid end November 2014 (FISCALIS event) First draft to be presented in June to VAT Committee, VEG and ad hoc meeting with participants to FISCALIS Publication of the explanatory notes by end 2015

Broader One Stop Shop A broader One Stop Shop: is needed for B2C transactions in order to remove major obstacles to cross-border trade and to the uptake of the digital economy in the EU based on smooth implementation of the MOSS in 2015 (as ensured) also requires better access to information study ongoing, based on recommendations of the High Level Expert Group on the taxation of the digital economy (HLG)

Recommendations of HLG on digital economy A broader One Stop Shop: Expand the One Stop Shop as a priority for B2C distance sales of goods and services. Under this recommendation, the Group also recommends the removal of registration thres- holds, the introduction of home country auditing and consideration of revenue sharing

Recommendations of HLG on digital economy Remove exemption for small consignments in respect of B2C supplies of goods from third countries. Under this recommendation it is proposed that the removal of the exemption can be supported by a One Stop Shop and a fast track customs procedure. It is also proposed to cover consign- ments below the customs threshold (currently €150)

Other future initiatives Public bodies: aim is to remove distortions of competition public consultation finalised in 2014 reform options now being analysed at technical level Passenger transport: aim is more neutral and simpler rules FISCALIS Seminar end of April 2015 way forward to be assessed following that seminar

Other future initiatives SMEs: Need for comprehensive review of SME scheme Objectives : reduce obstacles to the functioning of the internal market remove obstacles to effective competition reduce excessive compliance costs for SMEs Study soon to be launched

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