The EU Commission has asked Luxembourg to change its VAT rules concerning independent groups.

Under Luxembourg law, the services provided by an independent group to its members are completely free of VAT provided that the members’ taxed activities do not exceed 30% of their annual turnover (or 45% under certain conditions). Group members are also allowed to deduct the VAT charged to the group on its purchases of goods and services.

The Commission considers that these arrangements infringe the strict rules set out in European Union law which exempts from VAT the services provided by an independent group to its members where the services are directly required for their non-taxable or exempt activities. The Luxembourg rule providing for a ceiling for taxed operations does not, therefore, fulfil this condition. If Luxembourg do not change the rules the Commission will refer the matter to the European Court of Justice.

The French President has announced an increase in the standard rate of VAT to 21.2% (from 19.6%) to take effect from 1st October 2012. The proposal has not yet been adopted by Parliament. However, the outcome of the French Presidential election could interfere with this law being within this time-frame and without adjustments.

From January 1st 2012, the Polish intrastat thresholds in increased from 1.00.000 PLN to 1.100.000 PLN for arrivals and dispatches.

The EU Commission has published a proposal regarding the One Stop Shop scheme for business to consumer supplies of telecommunications, broadcasting, electronic services etc. The place of supply of such services will change in 2015 from the place where the supplier is established to the place where the customer is established. The proposal covers the scope of the scheme, reporting, currency, records etc.

A One Stop Shop scheme is already in operation for non-EU businesses supplying EU consumers. From 2015, the current scheme will be extended to both EU and non-EU businesses and in addition to electronic services, will also cover telecommunications and broadcasting services. The new scheme will allow suppliers to use a web portal in the Member State in which they are VAT registered to account for VAT due in other Member States.

The standard rate of VAT in Cyprus will be increased from 15% to 17% on 1st March 2012.

From 1st December 2012 non-established businesses will no longer be able to benefit from the UK VAT registration threshold. Such businesses will become liable to register immediately if they make taxable supplies in the UK. If the business makes only zero rated supplies in the UK it must still notify HMRC but it will be able to request exemption from registration. It should be noted that exemption from registration will however impact on the businesses ability to recover VAT incurred in the UK.

The threshold for submission of quarterly EC Sales Lists for intra-community supplies of goods is reduced from SEK 1,000,000 to SEK 500,000 from 1st January 2012. If the value of such sales exceeds this threshold, it is necessary to submit monthly declarations.

The thresholds for reporting intra-community movements of goods (Intrastat reporting) have been reduced. For arrivals the threshold has been reduced from DKK 3,600,000 to DKK 3,400,000 and the threshold for despatches has been reduced from DKK 4,800,000 to DKK 4,500,000.

In addition electronic filing of Intrastat returns is now obligatory.

From 1st January 2012, notary and bailiff’s fees will be subject to VAT at 21% (they were previously exempt from VAT) and the VAT rate on digital TV subscriptions has increased from 12% to 21%.

The threshold for submission of quarterly EC Sales Lists for intra-community supplies of goods is reduced from SEK 1,000,000 to SEK 500,000 from 1st January 2012.  If the value of such sales exceeds this threshold, it is necessary to submit monthly declarations.