Definitive VAT system for cross-border trade - a BusinessEurope position paper

Key messages

• We welcome the European Commission’s commitment to the creation of a single VAT-area based on maximum simplicity, clarity and robustness against fraud. We support in particular the Commission’s efforts to further improve and broaden the One-Stop-Shop. However, charging VAT on cross-border trade between businesses, will significantly increase compliance costs as businesses will have to be continuously informed about the wide range of different VAT-rates in the different Member States. We are also concerned that the proposed model will significantly impact cash-flow and may not reduce overall VAT-fraud.
• We are concerned that the Commission’s proposed application of the destination principle, whereby suppliers will have to deal with the tax administration of the country where the goods are transported to, rather than the administration where the customers are established, will bring an unnecessary increase in the overall administrative burden.
• We strongly oppose the Commission’s overall two-step approach, whereby the full technical provisions of the definitive system will be presented at a later stage, as it might lead to irreversible decisions being made on the principles of the legal framework of the future system without a full assessment of the Commission’s proposals being possible.