Accordance: Does the 2020 VAT Reform Package White Paper Go Far Enough?

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The recently published EU VAT Reform Package White Paper is aimed at simplifying VAT compliance across Europe before 2020, yet Andy Spencer, Head of Consulting from Accordance - the VAT compliance and consulting practice - questions whether eight years to standardise European VAT compliance is enough time.

The latest EU VAT project is an attempt by the EU Commission to simplify the compliance burden on business, while at the same time tightening up the system to reduce the amount of VAT lost to fraud.

“As a leading provider of VAT compliance services within the EU, we welcome any changes that simplify and streamline the compliance process for businesses trading in the area,” says Andy Spencer. “Measures to reduce fraud are also important, since an increase in the proportion of VAT due being collected may enable tax authorities to reduce the standard VAT rate, thereby also reducing the burden on consumers. However, real change could be further off than 2020 as the White Paper plans.”

Accordance has highlighted five proposals contained within the White Paper that exporters and professionals involved with VAT should know about:

1. Move to destination principle
One of the main proposals in the White Paper is to formally abandon the so called ‘origin system’ for the cross border supply of goods - where the supplier charges VAT at the rate that applies in their Member State - and move to a destination system for the intra-community supplies of goods. This will result in business customers self accounting for VAT.

“The changes are likely to have little practical effect on the taxation of intra-EU goods because the destination principle is currently being used albeit on a transitional basis,” says Andy. “Existing reporting such as EC Sales Lists and Intrastat will still be required to assist in tax collection, fight fraud and to collect trade statistics.”

2. Establish tripartite EU VAT forum
A tripartite VAT forum is to be established consisting of the Commission, Tax Authorities and a delegate representing taxpayers.

“The taxpayer delegate cannot possibly speak for all business sectors of his own Member State so how are the views of all tax payers - or even a majority - represented?,” Andy asks. “If the forum is not properly representative then its pronouncements could be weakened and decisions could take a long time to be agreed upon.”

3. Formally propose a standardised VAT return
The proposal to standardise the VAT return is to be presented in 2013. Each Member State currently has control over the information that is required on its VAT return and the reporting frequency. Currently several conflicts exist in relation to: the level of detail on individual Member State VAT returns; the filing frequency; the need for summary returns; and additional reporting such as EC Purchase Lists.

4. Formally propose a standardised VAT registration form
Currently, each Member State has control over how to handle the VAT registration procedure. The registration process differs across the EU and many Member States do not even have a ‘registration form’ to complete.

“The standardisation of the VAT registration form would require all Member States to agree on how it would work in practice; whether they should have a registration form at all, roll it out across the EU if they decide to go ahead with the form or abandon the forms altogether that some Member States already have,” says Andy.

5. Extend the scope of the ‘one stop shop’
The ‘one stop shop’ provides a mechanism for a business that has to account for VAT in multiple Member States to be registered in only one Member State and account for the VAT due in all Member States through the one registration.

The one stop shop is currently available to non EU businesses that supply electronically supplied services to private individuals within the EU and is to be made available to EU businesses in 2015, following the changes to the supply of certain services to private individuals within the EU.

“It should be noted that businesses that are required to be VAT registered for other reasons, such as the intra-community supply of goods, will not be able to use the ‘one stop shop’ so will continue to need VAT registrations in other Member States and will have to submit local VAT returns,” Andy explains.

The White Paper highlights the complexity of VAT compliance across Europe and the importance of having an expert such as Accordance to guide your business through the minefield.

Notes to editors:

  • Accordance is a unified VAT Compliance and Consulting practice, with a focus on cross-border transactions.
  • The company provides practical, commercially beneficial VAT assistance to blue-chip companies across the EU and beyond.
  • Accordance assists a full spectrum of international businesses better manage cross-border VAT costs.
  • The company reaches across Europe, but manages all work from an accessible and responsive hub in the UK.
  • The Accordance team includes senior ex-Big 4 VAT personnel, expert European VAT Compliance management, VAT legal specialists, Customs and Duty Experts and VAT savings experts.

For more information on this media release, please contact Angela Ward on: 01825 765617 or by email: angela(at)themarketingeye(dot)com


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