During today’s plenary session MEPs have adopted their opinions on three pieces of legislation which update the EU’s VAT regime.
The changes have been proposed by the Comission, mainly to update the rules to be fit for the digital age.
The rapporteur for all three opinions, Olivier Chastel (Renew, BE) said, “The use of digital technologies promotes efficiency, transparency and reduces administrative burdens thereby improving the competitiveness of our businesses. This new landscape must be fully profitable for tax authorities and businesses alike, and guarantee fair rules for our SMEs.”
Updating the VAT cornerstone legislation
The most important piece of legislation is that which updates the cornerstone of the EU’s VAT regime (Directive 2006/112/EC on the common system of value added tax), making it more in line with the realities of the current digital era.
While broadly supporting the Commission’s proposal, MEPs opted to propose a one-year delay to most of the elements put forward by the Commission to allow businesses to have time to prepare in full knowledge of the rules that they will need to comply with. MEPs also introduced some changes to he Commission’s proposals regarding the obligations of online platforms, notably those active in the area of short-term accommodation.
The opinion on this legislation was adopted by 570 votes in favour, 17 against and 52 abstentions.
MEPs adopted a second report, fully endorsing the Commission proposal, which makes changes to Directive 2006/112/EC regarding VAT rules for taxable persons who facilitate distance sales of imported goods. This was adopted with 603 in favour, 23 against and 10 abstentions.
Update to the VAT administrative cooperation arrangements
In the second piece of legislation (update of Regulation on administrative cooperation and combating fraud in the field of VAT), MEPs called for improved cooperation between all actors involved in the fight against VAT fraud, in particular EPPO, EUROFISC, EUROPOL and EUROJUST. They also say that the performance of the VAT Information Exchange System (VIES) VAT number validation functionality should be improved.
Finally, MEPs suggested that the Commission should support national tax authorities with financial and human resources and technical advice in order to guarantee that national electronic systems are fully operational by 1 January 2030.
The opinion on this legislation was adopted by 615 votes in favour, 10 against and 15 abstentions.
Member States lost EUR 93 billion in VAT revenues in 2020 according to the latest VAT Gap figures. Of this conservative estimates suggest that one quarter of the missing revenues can be attributed directly to VAT fraud linked to intra-EU trade. This fraud is in great part possible because the 30-year-old VAT rules for cross-border trade are not adapted to doing business in the digital age.