VAT Action Plan - a BusinessEurope position paper

Key messages

1. BusinessEurope welcomes the Action Plan on VAT, which sets out a pathway for the creation of a single VAT area in the EU, in contrast to the present highly fragmented and complex system. Maximum clarity, simplicity and legal certainty, alongside further practical actions which must be targeted and proportionate, are required to help reduce the complexity of the current system and its susceptibility of VAT to fraud and to further reduce the VAT Gap.
2. BusinessEurope supports the destination principle, as agreed by the European Council in 2012 whereby VAT is levied at the place and at the rate where the good or service is consumed, but further work on the collection methods needs to be done before a decision can be taken on whether the current system – exempted cross-border supply and taxable cross-border acquisition - should be changed. Further, there must be an equal treatment of both domestic and cross-border suppliers and of goods and services as this supports the supply chain.
3. BusinessEurope calls for a comprehensive package of measures to simplify VAT and ease the administrative burden, particularly for SMEs. This should include: an improved One-Stop-Shop relating to all EU and non-EU sales of goods to consumers, including electronic transactions; an EU VAT Web Information Portal to address the difficulty of businesses needing to have the correct information on the VAT rules (including the correct rates) in the state of residence of the consumer; enhanced co-operation between tax authorities to reduce complexity, increase efficiency and ensure neutrality by encouraging timely refunds to businesses for VAT already paid.