More firms to enjoy a simpler, cheaper, more effective VAT payment system
- Wider use of online payment would cut costs, increase VAT receipts
- New rules for firms selling tangible goods, non-electronic services
- MEPs want more coordination between tax authorities on taxable persons
MEPs vote to expand the use of an online VAT payment system for businesses which would slash compliance costs and deliver billions more to member states.
MEPs have thrown their weight -- by 540 votes to 30 votes, with 68 abstentions -- behind a proposal to expand the use of the “mini one-stop shop” (MOSS), currently used to calculate and collect VAT on e-goods, telecoms and broadcast services functioning across borders.
The proposal is to broaden the use of the MOSS, so that businesses selling tangible goods and non-electronic services across EU borders could enjoy the same efficiency benefits when calculating and paying VAT, by allowing them to pay a single member state for all their sales within the EU.
The European Commission says businesses currently operating outside of MOSS have to pay an average of € 8,000 a year to each Member State that they supply. An extension of the MOSS system could reduce regulatory costs for firms by €2.3 billion, while member states could see their VAT receipts rise by more than €7 billion annually.
MEPs also supported a separate, but related measure, by 576 votes to 30, with 32 abstentions, aimed at improving coordination between tax authorities on information about taxable persons, which would facilitate the functioning of the online system.
Catalin Sorin Ivan (S&D, RO), rapporteur said “This much-needed update to VAT rules for e-commerce will reduce compliance costs, boost trade, and also facilitate access to the European market for small businesses.”
Ludek Niedermayer (EPP,CZ), rapporteur said "This is another step towards a modern tax system fit for the 21st century. The result will be the prevention of fraud and the collection of more VAT, more efficiently.”
The proposal will now be passed to the European Commission and Council for final consideration.
These two pieces of legislation are part of a broader overhaul of the EU’s VAT system, aimed at creating a simpler, more fraud-proof and business-friendly VAT system. The reforms will also help reduce the “VAT gap,” that is, the difference between expected VAT revenues and the amount actually collected estimated by the European Commission to stand at EUR 170 billion.