Friday July 16, 2010
On 15 July 2010, the EU Commission announced that it has adopted a proposal to safeguard the rights of EU taxpayers to claim VAT refunds from other Member States. The proposal defers the deadline for submitting 2009 Refund Directive claims from 30 September 2010 to 31 March 2011. This has arisen because some Member States were late in launching the electronic portals that are now used to make claims and others have had technical problems in getting the portals up and running. This is very welcome news and shows that the Commission has listened to complaints from many taxpayers and representatives.
In addition the Commission proposes to set out guidelines on the technical operation of the portals as currently Member States have different views as to how the electronic system should operate. The Commission proposes common implementing measures regarding such issue as what documents should be attached to the claim and how taxpayers are notified of receipt of the claim. Member States must make the necessary changes to their legislation by 1 October 2010.
Wednesday July 14, 2010
The EU Commission has decided to bring infraction proceedings in the ECJ against seven Member States concerning the application of the VAT grouping rules in these countries. The Member States are: Czech Republic, Denmark, Finland, Ireland, the Netherlands, Sweden and the United Kingdom. For all countries with the exception of Sweden, the issue is that they allow non-taxable persons to join a VAT group which the Commission considers is not in line with the Principal VAT Directive. In Sweden and also in Finland, the issue is that VAT grouping is limited to financial and insurance services which the Commission considers is not permitted.
Infraction proceedings take some time so changes are not likely to be imminent although Member States could decide to make changes at any time to meet the Commission’s demands.
Wednesday March 17, 2010
The law implementing the VAT Package in Spain was published last week and clarifies the confusion concerning the application of the reverse charge in Spain especially in relation to event organisers.
Before 1st January 2010 a non-Spanish resident organiser of an event or exhibition charged Spanish VAT to non-Spanish companies for event organising services. The original 2010 proposals included a change in the reverse charge rule that meant that the liability to account for Spanish VAT shifted from the non-resident supplier to its non-resident customer irrespective of whether the customer was registered for VAT in Spain. This could have resulted in the customer having to register for VAT in Spain.
This seemed an irrational decision and fortunately the publication of the law last week returned the law to the position prior to 1st January. The change is retrospective to 1st January 2010. So the position now and from 1st January is that the non-resident supplier will continue to be required to be registered for VAT and charge Spanish VAT.
Thursday January 28, 2010
Spain’s second deputy prime minister has said that VAT is among the main priorities of the Spanish presidency of the EU.
Speaking at the European Parliament in Brussels, Elena Salgado, who is also Spain’s minister of economy and finance, said the Spanish EU presidency is keen to make progress on a range of VAT and indirect tax issues.
Appearing before the Committee on Economic and Monetary Affairs, Ms Salgado said the presidency aims to prioritise tackling tax evasion and improve transparency and cooperation between member states in order to combat VAT fraud.
She also expressed a commitment to building on the results of the Swedish presidency in order to improve the economies of all EU member states and make the various EU organs work more efficiently.
“We value the actions of the European supervisory authorities very highly, but this function does not disqualify national supervisory authorities from carrying out their role in this area,” Ms Salgado said.
“We will attempt to strike an appropriate balance.”
Monday January 11, 2010
The EU has announced plans to implement a new mechanism for deducting VAT on property.
According to the EC Council, the Lennartz mechanism for deducting VAT on immovable property for both business and private use will be removed, with the changes taking effect from January 1st 2011.
In place of the Lennartz mechanism, there will be a new pro-rata system used, which will deduct VAT based on the proportion of the property that is actually used for business purposes.
The EC Council explained that EU member states will have the option of applying the new deduction rules to other goods that are deemed to form part of companies’ business assets.
Furthermore, the EC Council said rules for determining the place of taxation ensure that VAT is levied at the place where natural gas, electricity, heat and cooling energy are actually being consumed by the customer.
Another important regulation, the EU VAT Package, was introduced at the start of this month, which means services supplied to a business in another EU member state will be treated as having been supplied where the customer is established.
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Friday December 11, 2009
The EU Council has agreed on a general approach to combating VAT fraud in the carbon permit trading markets.
Under a new draft directive devised by EU finance ministers, loopholes facilitating carousel fraud, where supplies are traded without paying VAT, will be closed off.
EU member states will be allowed to introduce a reverse charge mechanism through which they can tackle VAT fraud.
Member states that are currently allowed to apply the reverse charge mechanism on electronic goods and mobile phones will be allowed to continue to do until a new decision or directive is reached relating specifically to those goods.
The draft directive also stipulates that the liability for the payment of VAT on emission allowances and services will be shifted from the supplier to the customer until June 30th 2015.
Earlier this year, the European Commission laid out plans to tackle the rise in VAT fraud, prompting the UK, France and the Netherlands to suspend or amend VAT on EU emission allowances amid suspicions of widespread fraud.
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Thursday December 10, 2009
VAT fraud in the carbon markets costs Europe billions of euros in lost revenues, new figures reveal.
The Europol police agency said fraudulent traders within the European Union Emission Trading System have pocketed around five billion euros within the last year and a half.
According to the agency, which is based in The Hague, up to 90 per cent of the whole market was caused by illegal activities in some countries.
The fraud typically occurs when traders set up in one country and buy VAT-exempt carbon polluting allowances from a second country. Traders then sell these allowances on in the country where they are based without paying any VAT.
Rob Wainwright, director of Europol, said the agency is using its information capabilities and expertise to target the criminal groups involved.
"These criminal activities endanger the credibility of the European Union Emission Trading System and lead to the loss of significant tax revenue for governments," he commented.
France, the Netherlands, Spain and the UK have all changed the tax rules to combat carbon fraud.
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Friday December 4, 2009
The changes to VAT under the Tour Operators’ Margin Scheme (Toms) are likely to cause an administrative burden for tour operators, industry figures fear.
Under new European Union rules that come into force on January 1st 2010, operators who buy products such as hotel stock will have to register and account for VAT in the country where the product is located, reports Travel Weekly.
This means that operators who buy stock throughout Europe will be liable to pay VAT at rates ranging from six per cent to 25 per cent.
Fiona Colledge, of James Cowper, said it could take operators two to three months to get registered so they will have to make ensure they allow for different VAT rates within their costs in the interim.
"Operators are likely to pass these costs on to the end user, whether that’s another tour operator or a travel agent," she said.
A recent survey by Auto Trader found that a large proportion of Britons are unaware of the imminent VAT hike.
Wednesday December 2, 2009
Ireland urgently needs to cut its VAT rate in order to increase competitiveness with its neighbours, it has been suggested.
The Irish Independent pointed out that the difference between the UK’s current VAT rate of 15 per cent and Ireland’s 21.5 per cent rate has been a key factor in scores of shoppers crossing the border to Northern Ireland to obtain goods at a cheaper rate.
In order to raise revenue, compete with neighbouring markets and stimulate economic recovery, the Irish government needs to seriously reconsider its VAT rate, the publication stressed.
An editorial in the paper explained: "There is one area in which [the finance minister] could help the economy and quite likely raise revenue – by means of a tax cut, not an increase."
Retail Ireland recently reported that the migration of consumers to Northern Ireland for shopping trips resulted in the loss of around 1,700 jobs in November at an average of one job loss for every 150 cross-border shopping excursions.
Tuesday November 24, 2009
The European Commission has formally requested a number of member states to amend legislation which allows non-taxable companies to join VAT groups.
According to the European Commission, this current setup is "not in line with the proper application of Article 11 of the VAT Directive".
Proceedings have already begun against Ireland, Spain, Finland, Sweden, Denmark, the Netherlands and the Czech Republic.
The UK government has been given two months to amend its legislation to bring it in line with the EU otherwise the case may be referred to the European Court of Justice.
In the case of Sweden, the proceedings concern the fact that the country limits the VAT grouping system to financial and insurance services, which contravenes the VAT Directive.
Earlier this year in July, the commission adopted a communication on the VAT grouping option provided for in the VAT Directive, which set out how the regulation would be practically implemented.
