The European Commission on Friday set out proposals that will
allow cross-border traders to comply with only the VAT requirements
of the Member State in which they are established, rather than in
all the Member States in which they do business.
The proposals – which, if approved, will result in two new EU
Directives and one EU Regulation – contain six elements intended to
simplify the current Value Added Tax compliance obligations imposed
on cross-border traders who supply goods and services to other EU
Member States.
These are:
- A proposal to give a trader the option of using the VAT number
by which he is identified in his own Member State for all supplies
made to other Member States and of making VAT declarations to one
single electronic portal. This information would then be submitted
automatically to the different Member States where he supplies
goods or services. The trader would pay the VAT directly to the
Member State where the VAT is due. Non-EU traders would also have
the option of using this scheme.
- A similar "one-stop-shop" approach would be introduced for
requesting refunds of VAT from other Member States. The electronic
portal would ensure that the refund request was directed to the
Member State where the expenses were incurred, which would refund
directly to the applicant. The deadline for repayment of VAT would
also be reduced from six months to three months and a Member State
would, if it exceeded the deadline, be required to pay interest of
1% a month, calculated on the amount refunded.
- The categories of expenses for which Member States may choose
to apply restrictions to the right to deduct VAT would be
harmonised.
- The use of the reverse charge mechanism - whereby a receiving
trader rather than the supply trader is responsible for paying the
VAT- would be extended.
- The threshold under which traders, in particular SMEs, would be
exempt from VAT could be set by Member States at a maximum of €100,
000.
- The arrangements concerning distance selling of goods subject
to VAT would be simplified by introducing a global threshold, set
at €150, 000, calculated on all supplies to other Member States. At
present different Member States have different thresholds for
distance selling.
"The European Council has identified the reduction of the
administrative burden on business as an important element for
fostering economic growth," said Frits Bolkestein, Commissioner for
the Internal Market and Taxation. "This proposal is a valuable
contribution towards that objective".
