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Simplifying Cross-Border VAT Treatment

Gareth Bevan 24 November 2016 No comments

EU to Simplify and Harmonise the VAT treatment of Cross-Border Transactions

The Economic and Financial Affairs Council (ECOFIN) is responsible for EU policy on taxation issues. At its November meeting, ECOFIN adopted conclusions on improvements to the VAT rules for cross-border transactions. These are in response to particular issues raised when the European Commission’s Action Plan on VAT was discussed by the Council.  

In particular, the conclusions relate to:

  • The VAT identification number as an additional condition for application of zero-rating in respect of an intra-EU supply.
  • Improving the quality and reliability of data used in the EU’s VAT information exchange system in order to better tackle VAT fraud.
  • Determining the VAT treatment of chain transactions. That is, where goods are shipped from a member state other than that of the supplier and the customer (including ‘triangular transactions’).
  • Simplifying VAT rules for call-off stock (where goods are sent to a customer’s storage facility in another member state).
  • The undertaking of further work on the level of documentary proof required for the zero-rating of intra-EU supplies.
  • ECOFIN asked the Commission to present legislative proposals and conduct studies in these areas, as appropriate.

There seems to be general support for these changes throughout the EU, so it is hoped agreement and implementation could be relatively speedy by EU standards.  If the legislative process goes smoothly then the potential implementation date could be as soon as 01 January 2018.  These changes are likely to be welcomed by businesses operating in the EU. If adopted, there will be greater harmonisation of VAT rules, giving businesses greater certainty.

Of course, we will keep you up to date with future developments on these changes.

For more information about the Action Plan on VAT, please see our earlier article by clicking here.


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