Detailed technical measures for the definitive VAT system

13-09-2018

The common European value added tax (VAT) system was set up in 1967 and reformed to adapt it to the entry into force of the internal market in 1993. Therefore, the existing rules governing intra Community trade, which were intended to be transitory, are 25 years old. VAT is an important source of revenue for both national governments and the EU budget, but the current system is ill-adapted to the challenges of a modern economy. It presents such problems as vulnerability to fraud, high compliance costs for businesses, and a heavy administrative burden for national authorities. As part of the action plan on VAT, the European Commission adopted a new proposal in May 2018. This proposal would amend the VAT Directive (Directive 2006/112/EC) to introduce the detailed technical measures of the definitive VAT system for the intra-EU business to business (B2B) trade of goods. It is part of the action plan on VAT and follows another proposal that sets out the basic features of the reform of the common EU VAT system. Some aspects of the previous proposal were taken out of the negotiations to be examined with this one.

The common European value added tax (VAT) system was set up in 1967 and reformed to adapt it to the entry into force of the internal market in 1993. Therefore, the existing rules governing intra Community trade, which were intended to be transitory, are 25 years old. VAT is an important source of revenue for both national governments and the EU budget, but the current system is ill-adapted to the challenges of a modern economy. It presents such problems as vulnerability to fraud, high compliance costs for businesses, and a heavy administrative burden for national authorities. As part of the action plan on VAT, the European Commission adopted a new proposal in May 2018. This proposal would amend the VAT Directive (Directive 2006/112/EC) to introduce the detailed technical measures of the definitive VAT system for the intra-EU business to business (B2B) trade of goods. It is part of the action plan on VAT and follows another proposal that sets out the basic features of the reform of the common EU VAT system. Some aspects of the previous proposal were taken out of the negotiations to be examined with this one.