Richard Cornelisse

Archive for the ‘Tax News’ Category

January 2014 International Indirect Tax Updates

In EU development, General, Indirect Tax Automation, Tax News on 08/01/2014 at 1:34 am

January 2014 International Indirect Tax Updates

By Patrycja Wolniczek Mucha On January 2, 2014

Along with released budget measures for year 2014 many countries have passed legislation or announced a number of changes that have an impact on the VAT rates. These changes are a response to economic and budgetary developments in the particular country. We have summarized the upcoming VAT rate changes with the following countries.

The changes will become effective 1 January 2014 unless otherwise noted.


In accordance with the Law Amending the Law on Value Added Tax of 4 December 2013, the reduced VAT rate of 10% will increase to 13%.  The government expects that these measures along with excise and income tax changes will reduce the budget deficit by HRK 2 billion or around 0.6% of Gross Domestic Product and by HRK 4 billion or 1.2% of GDP in 2015 and a further 1.7% of GDP in 2016. On 1 July 2013 Croatia became a Member of the European Union.


In year 2012 the Cypriot government has announced a VAT increase in two stages. In accordance with the plan, on 14th January 2013 the standard rate went up by 1% reaching 18%. A further 1% increase will come into effect on 13th January 2014. The new standard rate will be 19% and the reduced rate will increase to 9%. Cyprus’s VAT change is an economic response to the Greek financial crisis. In order to secure beneficial loan terms with Russia, the government had to agree to the VAT changes as part of the bail out by the ‘Troika’ of the European Union, European Central Bank and International Monetary Fund.

Dominican Republic

Under the Law No. 253-12 effective 1 January 2014 the reduced VAT rate of 8% will go up to 11%. The VAT change is part of the 2012 tax reform which included the initial reduced rate increase to 8% in 2013 and the standard rate hike to 18%. According to the law schedule the reduced rate will further increase to 13% in 2015 and to 16% in 2016. The standard rate is planned, however, to go down to 16% in 2015. Subject to the reduced rate increase are most of the basic food commodities.


The standard VAT rate will increase to 20% on 1 January 2014. In addition, many basic commodities will become more expensive as the reduced VAT rate will go up from current 7% to 10%. In Corsica the current 8% reduced rate will also go up to 10%. The increase reflects changes included in the Amending Finance Law no. 2012-1510 of 29 December 2012.  Article 68 of the above mentioned law, initially provided for a decrease in the lower reduced VAT rate from 5.5% to 5% as of 1 January 2014. The new Budget Finance Law 2014 draft keeps, however, the 5.5% rate in place for 2014.  With the VAT increase France will be joining most other EU member states which have been shifting the tax burden from business onto consumers in a bid to attract and retain multinational businesses.


Following the 2014 Budget, the parliament passed a new VAT Act, which increased the standard VAT rate from 12.5% to 15%. The government justifies the increase with the need of infrastructure investments in accordance with the development agenda.  Currently, Ghana is heavily reliant on deposits of gold. Expanding the revenue basis with higher VAT would help raise €300 million.


As published in the Official Gazette of Honduras and in accordance with Decreto No. 278-2013, the standard VAT Rate went up from 12% to 15% and the increased VAT rate went up from 15% to 18% effective 1 January 2014. The increase was included in the package of fiscal measures aiming at preventing the country from a major economic crisis. The economists assess the impact of changes as intense enough to generate, according to estimates of the Ministry of Finance, about three billion Lempiras in inflation by rising prices of basic commodities. The rate change will also contribute to increase the poverty rate among Hondurans.



In accordance with the new Consumption Tax Act, the consumption tax will increase from 5% to 8% with effect from April 2014. This change is the first of a two-step process which is expected to reach 10% by 2015. The reason for the hike relates to the government’s long-term plan to reduce its primary budget deficit by 2015 and stabilizing its debt burden by 2020. Before a final decision on the 2015 increase, the government will have to further examine economic factors and other conditions.


With the economic package, the government repealed the current 11% rate of VAT, as applicable for the border region (the border between Mexico and the United States), and will impose the general VAT rate of 16% as of 1 January 2014. The change will have a negative impact on local business and employment in the border zone.

Portugal Autonomous Regions – Azores

As part of the 2014 budget and in accordance with the budget approving Decree n. º 191/XII, the standard and both reduced VAT rates will go up. As of 1 January 2014 the standard VAT rate will increase from 16% to 18%, the intermediate rate from 9% to 10% and the reduced rate from 4% to 5%.


The reduced VAT rate of 8% will become 10%. Serbia’s Finance Minister Lazar Krstic explained the measure as a necessary step to avoid a financial meltdown. The increase will help close the budgetary gaps but will also hit the poorest parts of society hardest.

As a result of economic factors the following initially scheduled VAT rate changes will not be implemented in the upcoming months:


According to the Belarusian Deputy Prime Minister Piotr Prokopovich last statement, the current VAT rates will remain unchanged for the year 2014. Earlier this year, the Government announced a plan to increase the standard VAT rate to 22% in 2014.


The current VAT rates will remain unchanged as a result of the last VAT Act amendment.   The VAT rates were temporarily increased on 1 January 2011 and were scheduled to take effect until 31 December 2013. Effective 1 January 2014 the VAT rates were supposed to return to their previous lower level. Based on the information provided by the Government Information Centre (CIR), the extension of the current higher rates was caused by the need to reduce imbalances in public finances, as well as by a weak demand in major export markets. Both factors are limiting the economic growth.


On 19 December 2013, the parliament adopted amendments to the Tax Code. The initially planned decrease of the VAT standard rate to 17% has been postponed until 2015. In 2014, the VAT standard rate will remain at 20%.  On 31 December 2013 the President Viktor Yanukovych signed the amendments into law.

via January 2014 International Indirect Tax Updates – Thomson Reuters Tax & Accounting.

KEY – LiNKiT launching eBilanz-Cockpit for Germany: our integrated SAP solution

In Business Strategy, EU development, General, Processes and Controls, Tax News on 11/09/2013 at 3:22 pm

Ferry_LinkedIn KEY-GROUPThe legal requirement for the creation and submission of an electronic tax balance sheet (e-balance) in XBRL poses a major challenge for all companies located in Germany. Even though the new law is applicable as of fiscal year 2013 for most taxpayers, many ERP software providers, such as SAP, do not offer a satisfactory solution for complying with the comprehensive legal requirements.

The standard functionality of SAP supports only the data provisioning for the electronic tax balance. Separate add-ons are needed for the creation of the final XBRL file and the electronic submission. SAP’ s own ‘solution’ is called ‘SAP ERP client for E-Bilanz’ and is a local Excel Add-on application and not an integrated SAP solution. It does not work without the generic risk of interfaces.

These risks can be eliminated with as endgame the entire process fully integrated into SAP.

All our products are in SAP integrated products (without external interface) and have been implemented by major multinationals and of course client references are available.

The advantages of the eBilanz Cockpit

  • The KEY – LiNKiT eBilanz Cockpit is an easy-to-use and lean solution for the German e-balance
  • It is fully integrated into SAP, thus easily accessible while it avoids problems with generic interface risks
  • The cockpit’s ten steps process, provide an intuitive guideline for the process of creating and filing the e-balance
  • The cockpit has clever features, such as the drag & drop functionality for mapping the company’s chart of accounts to the required fiscal taxonomy, making the cockpit an user-friendly tool
  • In order to provide a comprehensive solution for the entire corporate group, the cockpit also has an interface for non-SAP systems, enabling the upload of financial data from subsidiaries not using SAP
  • All the group’s tax balances can be created in and filed from one central SAP system. Various characteristics of the cockpit ensure an audit-proof process
  • The tax adjustments made in the cockpit do not influence the regular SAP data and are tracked in a separate document journal.
  • Just as in SAP itself, all entries and changes are recorded, thus ensuring that the cockpit meets high standards of IT and process security, including a full audit trail.

Read more about  basic data flow within the cockpit, implementation plan and return on investment opportunities in slide deck below.

LiNKiT eBilanz Cockpit front

Download LiNKiT eBilanz PowerPoint

Consumption tax – Organisation for Economic Co-operation and Development

In EU development, General, Processes and Controls, Tax News on 09/08/2013 at 9:31 am

Consumption tax – Organisation for Economic Co-operation and Development

05/08/2013 – On 4 February 2013, the OECD released an invitation to comment on four new draft elements of the OECD International VAT/GST Guidelines.

The OECD has now published the comments received, which can be downloaded by clicking on the links below. The OECD is grateful to the commentators for their input.

Working Party No. 9 of the Committee on Fiscal Affairs will use the main findings to inform its work on the development of the OECD International VAT/GST Guidelines.

  1. A3F
  2. AFME
  3. BASF
  4. BBA
  5. BP
  8. CBI
  9. CFE
  10. CIOT
  11. Confederation of Swedish Enterprise
  13. EBF
  14. Ernst & Young
  15. FBF
  16. Febelfin
  17. FEE
  18. FIDAL
  19. ICAEW
  20. Insurance Europe
  21. IUA
  22. Law Society of England and Wales
  23. NFTC
  24. ODIT
  25. RISHI GAINDA (Unilever)
  26. SOFTEC
  27. SwissBanking
  28. TAXAND
  29. TEI
  30. USCIB
  31. VPG

Taxmarc™ Basic

In Audit Defense, Benchmark, Business Strategy, Indirect Tax Automation, Indirect Tax Strategic Plan, Processes and Controls, Tax News, Technology, VAT planning on 02/08/2013 at 9:43 am

Richard Cornelisse

Taxmarc™ Basic is a standard package of Taxmarc™ Tax Engine that uses native SAP functionality and contains an integrated Tax control Framework. Taxmarc™ Basic is specifically useful for companies that run medium complex business models.

Taxmarc™ Basic uses assumptions via pre-defined configuration, thus without a real-time reality check performed by Taxmarc™ of such. For those businesses that have a complex business model but do not need the full Taxmarc™ Tax Engine functionality, the Taxmarc™ Basic solution offers a VAT compliant determination solution.

Taxmarc™ Basic does not only address the shortcomings in standard SAP VAT determination, but also ensures control of VAT with the integrated VAT Control Framework in a transparent and easily maintainable way.

Taxmarc™ Basic is built on the proven Taxmarc™ platform and the de-scoped features from the full Taxmarc™ Tax Engine can be added at any point later on when additional budget becomes available or new requirements and controls are needed due to changes in VAT legislation and/or business models.


The SAP VAT determination logic was developed a long time ago (1980’s) and except for the “plants abroad” logic SAP’s VAT determination logic has not changed much. This in contrast with the VAT rules and business models as these have changed significantly. A brief overview of some of these changes:

  • the EU VAT laws have been more harmonized (EU VAT directive)
  • substantial increase of cross border transactions,
  • businesses are registered for VAT in multiple countries,
  • businesses are operating more often under complicated principal structures
  • increased number of (integrated) intercompany and supply chain transactions

As a result, there has been a huge increase in the complexity for the SAP system to meet all VAT requirements, which leads to necessary modifications to the standard SAP VAT for many multinational businesses.

Modifications of already very complicated SAP systems create a risk for maintenance and half-hearted solutions. At the same time, tax authorities across the world both sharpen their focus on non-compliant taxpayers and increase their focus on reviewing ERP systems as a source of VAT compliance risks. As a result, businesses have to ensure that the VAT determination logic in the SAP systems is correct, easy to implement and remains VAT compliant.


Taxmarc™ Tax Engine integrates tax relevant data from multiple transactional data sources to determine the correct VAT in a consistent way. Taxmarc™ Basic uses assumptions via pre-defined configuration, thus without a real time reality check performed by Taxmarc™ of such.

For those businesses that have a complex business model but do not need the full Taxmarc™ Tax Engine functionality, the Taxmarc™ Basic solution offers a VAT compliant determination solution.

Taxmarc™ Basic does not only address the shortcomings in standard SAP VAT determination, but also ensures control of VAT with the integrated VAT control framework in a transparent and easily maintainable way. Compared to any other solution available in the market the features of Taxmarc™ Basic contribute considerable more in realizing indirect tax objectives.

An additional advantage is that when the proven platform of Taxmarc™ is implemented, the de-scoped features can be added at any point later on when additional budget becomes available or new requirements and controls are needed due to changes in VAT legislation and/or business models.

Taxmarc™ Basic features

Taxmarc™ Basic includes the following features:

  • VAT management cockpit (light version)
  • Standard SAP IMG (Implementation Guide) functionality to implement and customize the Taxmarc™ solution and enabling easy and cost efficient maintenance
  • Automated VAT determination based on available customer VAT registration (combined with tax control framework)
  • Smart VAT condition design – using a maximum of approximately 250 conditions per tax jurisdiction (low maintenance costs)
  • Automatic assignment of condition records/tax codes in case the company gets new VAT registration numbers (jurisdiction must already be available in Taxmarc™)
  • An integrated Tax Control Framework which ensures that transactions that fail to comply with fiscal requirements are automatically blocked (immediate resolving the non-compliance) or put in an emergency table (retrospective correction)
  • Automated VAT determination of: 1. Standard Triangulation, 2. VAT group scenarios, 3. Bonded/VAT warehouses, 4. Domestic Reverse charge, 5. Special VAT regions (i.e. Canary Island), 6. Plants abroad scenarios, 7. Intra EU and Export. 8. Supply of services (including VAT package 2010)
  • Automated sequential invoice numbers per Tax Jurisdiction
  • Automated and improved VAT code determination for EDI (iDoc) intercompany invoices
  • Required VAT data to comply with invoice requirements

Taxmarc Basic final

Return on Investment – after implementation Taxmarc™ Tax Engine

  • Less resources needed for indirect tax compliance process due to automation (excellent ROI)
  • Less commercial risks re vendors and customers because of  incorrect invoicing with cause effect a hidden factory: substantial time spent on corrections and monitoring (excellent ROI)
  • Reduction on time needed re maintenance and training resulting in lower overall costs (excellent ROI)
  • Reduction of unforeseen tax risks during audits (outcome lower assessments) and time needed for inhouse and/or external advisor to manage indirect tax risks that exceed companies’ risk appetite properly (excellent ROI)
  • Lower external advisory costs due to improved effective communication possibilities as stakeholders can be given access real time to relevant data by which wrong assumptions/rework/inefficiencies could be avoided (excellent ROI)
  • Real time blue print of business model available and accessable for continuous monitoring and planning re change management: new supply chain (model), centralization, outsourcing etc. (excellent ROI)
  • Optimized multidisciplinary (tax) planning via real time data: e.g. detailed visibility of intercompany transactions for transfer pricing, customs and VAT purposes (excellent ROI)
  • Efficient and effective Indirect Tax function: real time involvement on risk areas that matter by which future firefighting can be avoided (excellent ROI)

By Richard Cornelisse, Director Strategy & Sales van Taxmarc™

Download Taxmarc™ Digital Flyer


In Audit Defense, Business Strategy, EU development, Indirect Tax Automation, Indirect Tax Strategic Plan, Processes and Controls, Tax News, Technology on 15/02/2013 at 1:45 pm

Real-time and fully automatic evaluation of tax compliance eliminates VAT risks

Amsterdam, February 15, 2013 – Taxmarc™ – an online VAT manager – provides companies with a complete overview of all data relevant to determining the VAT liability for business transactions.

This enables tailor-made  VAT determination of transactions. Moreover, Taxmarc™ provides an online tax control framework that encompasses real-time evaluation of tax compliance and the consistency of the combination of the VAT data entered.

Hereby it offers an effective tool that facilitates efficient deployment of employees and optimal risk management regarding indirect tax.

For virtually every company the efficiency of compliance with local VAT regulations depends entirely on the functionality of the underlying ERP system, such as SAP. Determining the VAT liability and recovery in these systems is only partly automated and is mostly done manually.

By drawing upon 30 parameters instead of the 4-8 parameters in standard SAP, Taxmarc™ enables – without extra interface – a fully automated VAT determination of all (chain) transactions in SAP.

The tool incorporates VAT relevant data of all legal entities in order to ensure the correct VAT determination of transactions. SAP exclusively focuses on transactions within a single company; it only assesses the underlying individual transactions and fails to link the current transactions to the VAT results of previous transactions.

As a consequence, companies with VAT registrations in different countries cannot automatically comply with all VAT obligations. In addition, many multinationals operate with different versions of ERP systems, each business unit often has a separate system and there are multiple core systems per country.

This creates genuine risks such as VAT assessments, insufficient VAT refunds, and possibly fraudulent transactions. Also, synchronizing the periodic VAT reports based on these different sources takes a lot of time and resources.

Extra ‘brain capacity’

“The business models of internationally operating enterprises have radically changed over the last couple of years. As business practices go beyond national boundaries and sufficient harmonization of regulations in different countries is lacking, maintaining the VAT position is extremely complicated.

Without the right VAT regulations, regular ERP systems fail to process data correctly, risking incorrect calculation of VAT, failure to comply with local VAT obligations, and transactions that cannot be commercially executed”,

Richard Cornelisse, Director Strategy & Sales of Taxmarc™ emphasizes.

“The standard functionality of SAP is insufficient for building a viable and adequate virtual VAT manager.

In actual practice, these flaws in SAP are often patched up in order to keep the system running. Taxmarc™ basically creates a bypass in SAP, thereby building on the standard functionality and infrastructure of SAP, but we are adding extra ‘brain capacity’.

Real-time fiscal monitoring

Taxmarc™ provides a VAT/GST Tax Control Framework integrated in SAP. This framework ensures that transactions that do not comply with tax laws are automatically blocked.

Beside the highly improved preventive controls regarding risk management, Taxmarc™ underpins more efficient business processes and increased productivity. It enables a substantial reduction of the working hours and resources that are spent on the regular manual tax return process, as well as centralization of local compliance functions (Shared Services Centers).

Taxmarc™ has been implemented by multiple renowned multinational companies, including AkzoNobel Chemicals, Sigma Aldrich, ASM International NV, Fujifilm and ExxonMobil.

Our business model is extremely complex, especially with regard to VAT. We’re operating worldwide with many (chain) transactions that go across the borders and therefore we often have multiple VAT registrations per legal entity. 

Using the standard settings in SAP, automatic VAT determination of individual transactions was not possible.

Taxmarc™ has enabled automatic VAT determination of all transactions for our company. Taxmarc™ identifies real-time when certain transactions are not possible, for instance because a local VAT registration is missing. 

Improbable and atypical results are immediately visible and can instantly be corrected, so corrections afterwards can be prevented. 

Client references are important and can be provided. It is your way to validate that we indeed keep our promise.

Taxmarc™ is investigated by a Big4 organization and is qualified as the best VAT quality solution for the complex business models of customers.


For more information

Richard Cornelisse, Director Strategy & Sales of Taxmarc™, phone: +31 6 53 99 48 74; e-mail:

Robbert Hoogeveen, Director Technology of Taxmarc™, phone: +31 6 57 94 70 93; e-mail:


Download Taxmarc™ Digital Flyer

Taxmarc™: your best SAP solution for Indirect Tax Automation (

OECD Issues Draft Guidelines On VAT On Services, Intangibles – February 2013

In EU development, General, Tax News on 10/02/2013 at 11:43 am

The Organization for Economic Cooperation and Development (OECD has released its latest set of draft Guidelines to address uncertainty and the risk of double taxation and unintended non-taxation that results from inconsistencies in nations application of value-added tax VAT to international trade, with a specific focus on trade in services and intangibles.

The Guidelines build on two core principles that were adopted by the OECD’s Committee on Fiscal Affairs in 2006:

  • The “neutrality” principle, whereby VAT is a tax on final consumption that should be neutral for business;
  • The “destination” principle, whereby internationally traded services and intangibles should be subject to VAT in their jurisdiction of consumption.

Read more: OECD Issues Draft Guidelines On VAT On Services, Intangibles.

OECD International VAT/GST Guidelines – Draft Consolidated

4 interim drafts:

  1. a preface to the Guidelines;
  2. the core features of VAT-systems to which the Guidelines are intended to apply,
  3. place of taxation for cross-border supplies of services and intangibles to businesses that have establishments in more than one jurisdiction,
  4. implementation of specific rules for determining the place of taxation for cross border business-to business supplies of services and intangibles.

OECD International VAT/GST Guidelines – Draft Consolidated - INVITATION FOR COMMENTS FEBRUARY 2013


VAT rates – European Commission – Situation at 14th January 2013

In EU development, Processes and Controls, Tax News on 20/01/2013 at 12:26 pm

VAT rates applicable in the EU Member States.


VAT rates – European commission.


Member States


Super Reduced Rate

Reduced Rate

Standard Rate


Parking Rate




6 / 12








Czech Republic



























6,5 / 13












5,5 / 7






9 / 13,5






























6 / 12






5 / 18





























6 / 13























10 / 14






6 / 12



United Kingdom








N.B.:Exemptions with a refund of tax paid at preceding stages (zero rates) are not included above (see section V)



Reblog: David Cameron: Tax avoiding foreign firms like Starbucks and Amazon lack ‘moral scruples’ – Telegraph

In Audit Defense, EU development, Tax News on 05/01/2013 at 2:03 pm

By Christopher Hope, Senior Political Correspondent from The Telegraph

Foreign companies like Starbucks and Amazon which have avoided paying large corporation tax bills in Britain lack “moral scruples”, David Cameron has said.

The Prime Minister said he was going to make “damn sure” that foreign companies like Starbucks and Amazon which have been found to avoid legally paying a large corporation tax in the UK paid their fair share.

Mr Cameron was speaking weeks after MPs on the Public Accounts Committee accused Starbucks, Google and Amazon in a high profile report of “immorally” minimising their UK tax bills.

Last year Treasury minister David Gauke caused a row when he told The Daily Telegraph that people who paid cash in hand to tradesmen, allowing them to avoid VAT, were “morally wrong”.

Mr Cameron was asked by a business audience in the north west of England on Thursday why “Starbucks and Amazon” were allowed to avoid paying large corporation tax bills, given that they have a large presence in the UK.

Mr Cameron said:

“We’ve got to crack that, you’re absolutely right. This is a really important issue. We’re saying, are going to have a really low rate of corporation tax but I want to make damn sure that those companies pay it.”

Mr Cameron said he wanted to start a debate in the UK about “really aggressive tax avoidance”.

He said: “We do need a debate in this country, not only what is against the law – that’s tax evasion, that is against the law, that’s illegal and if you do that the Inland Revenue will come down on you like a tonne of bricks – but what is unacceptable in terms of really aggressive tax avoidance.

“Because some people say to me, ‘Well, it’s all within the law; you’re obeying the law, it’s okay’. Well, actually there are lots of things that are within the law [that] we don’t do because actually we have some moral scruples about them and I think we need this debate about tax too.

“I’m not asking people to pay massive rates of tax. We’ve got a low top rate of income tax now; we’ve got a low rate of corporation tax now; we are a fair tax country. But I think it’s fair then to say to business, you know, we’re playing fair by you; you’ve got to play fair by us.

Mr Cameron’s words go much further than his letter to other leaders of the G8 economies when he said he wanted to stop this form of tax tourism.

He continued: “I’ve put it right at the top of the agenda for the G8 this year as well as making sure we fix it nationally too.

“It’s simply not fair and not right what some of them are doing by saying, I’ve got lots of sales here in the UK but I’m going to pay a sort of royalty fee to another company that I own in another country that has some special tax dispensation.

“That is that’s not right, and so we are looking at it. I’m chairing the G8 this year so I’m going to be getting the Americans and the French and the Germans and the Italians and the Japanese all to look at this together at how can we try and stop unfair tax farming practices?

“Because look, you know, we’ve got a very low rate of corporation tax; we’re already giving business a good deal, but I think to take that deal and then say, I’m actually going to find a way of not paying any corporation tax at all that’s not right.”

Last month, MPs on the Public Accounts Committee criticised Starbucks, Google and Amazon for the “unconvincing and, in some cases, evasive” evidence they gave on why their corporation tax payments are so low.

Starbucks bowed to pressure over its accounting methods on the eve of the report’s publication saying it would review its “tax approach” in the UK.

The coffee giant told MPs it had made a loss for 14 of the 15 years it has operated in the UK, achieving just a small profit in 2006.

Starbucks, with more than 700 outlets in the UK, said it was “committed to the UK for the long term”. It said: “We are looking at our tax approach in the UK. The company has been in discussions with HMRC for some time and is also in talks with the Treasury.”

The MPs also criticised a representative from Amazon, whose responsive because he was “evasive and unprepared to answer legitimate questions”.

While the company had a UK operation involving 15,000 staff it pays little corporation tax in the UK. It said the company’s UK website reported a turnover of £207 million for 2011 but its tax expense was just £1.8 million.

via David Cameron: Tax avoiding foreign firms like Starbucks and Amazon lack ‘moral scruples’ – Telegraph.

New VAT rules to make life easier for businesses from 1st January 2013

In EU development, Tax News on 17/12/2012 at 9:17 pm

New VAT rules to make life easier for businesses from 1st January 2013

From 1st January 2013, new EU VAT rules enter into effect, which will make life much simpler for businesses across Europe.

First, electronic invoicing will have to be treated the same as paper invoicing, enabling companies to choose the VAT invoicing solution that works best for them.

This has the potential to save businesses up to €18 billion a year in reduced administration costs.

Second, Member States will be allowed to offer a cash accounting option to small businesses with a turnover less than €2 million a year.

This means that these SMEs will not have to pay the VAT until it has been received by the customer, thereby avoiding cash-flow problems for them.

Algirdas Šemeta, Commissioner for Taxation, Customs, Anti-fraud and Audit, said:

“These new VAT rules reflect what businesses in Europe need today: simpler procedures, reduced costs and support in applying solutions that best meet their needs.”


The second Directive on VAT invoicing was adopted in July 2010, and must be applied in all Member States from 1st January 2013.

It aims to simplify rules on VAT invoicing to reduce burdens and barriers for businesses.

Electronic and paper invoices are placed on an equal footing, with common rules, under the Directive, in order to promote the uptake of e-invoicing. Member States will no longer be allowed to set pre-conditions for the use of electronic invoices, such as e-signatures, and invoices will be allowed to be electronically stored.

In addition, the new rules give, Member States the option of allowing small businesses with a turnover under €2 million to declare and pay their VAT when they receive or make payments , rather than at the time of the invoices.

In view of the long delay that can occur between invoicing the customer and receiving payment, in particular for small businesses, this will provide them with relief in terms of cash flow.

The transposition of VAT invoicing rules in the EU 27 Member States is also a key action under the Digital Agenda for Europe.

For a full explanation of the main VAT invoicing rule changes as from 1st January 2013, see:

via EUROPA – PRESS RELEASES – Press Release – New VAT rules to make life easier for businesses from 1st January 2013.



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