Richard Cornelisse

Posts Tagged ‘EU VAT’

Algirdas Šemeta EU Commissioner – Press Conference On European Semester Brussels, 30 May 2012

In Tax News on 30/05/2012 at 6:04 pm

Algirdas Šemeta EU Commissioner for Taxation and Customs Union, Audit and Anti-Fraud Statement on Savings Tax Agreements and VAT strategy

The quality of taxation can be a “make or break” factor in Member States’ efforts to consolidate budgets and establish sustainable economic growth.

Our recommendations today in the field of taxation are focussed largely on 5 areas which are fundamental to quality tax systems.

First, labour taxation in many Member States is still too high, and not enough has been done to shift this burden towards more growth-friendly taxes. Taxation can incentivise work and employment, but only if smartly designed. The opportunity for a smart tax shift is too frequently being missed.

Second, within the context of this tax shift, environmental taxes are among the most growth-promoting. In fact, not only do green taxes support our goal of a low-carbon, resource-efficient economy, but they also encourage new industries, green innovation and job creation. Many Member States are still not exploiting the full potential of environmental taxes.

Third, we have asked some Member States to look again at their property taxes. Without a doubt, the debt-fuelled consumption of the past decades has failed us. Therefore, taxation which incentivises debt and encourages housing bubbles must be phased out. Sensible taxation of property is growth-friendly, but it is not being utilised enough.

Fourth, Member States should look for the untapped potential in their tax systems. Where the base can be broadened and tax gaps closed, this should be done. A tax system full of tax breaks means less revenue and unfair burden-sharing across society.

Finally, ordinary citizens could potentially carry a lighter tax burden if everybody paid what they owed. However, tax evasion and avoidance lead to revenue losses of around €1 trillion a year. Many Member States could do a lot more to improve tax compliance and collection. Coordination at EU level is also crucial, which is why tackling tax evasion remains one of the priorities for my mandate.

Before I conclude, it is worth noting that most Member States did take on board the Commission’s recommendations from last year in the area of taxation. Some have already used them to implement improvements in their tax systems. Others are still working on tax reforms.

I would urge Member States to also follow the tax recommendations we have made today. Their implementation will support the work for a stronger and more sustainable economy, and help to put Europe back on the path of growth and employment.

Related Topics

Richard Cornelisse is CEO of the KEY Group and worked previously as Big4 Partner in the Tax Performance Advisory and Indirect Tax Practice and blogs on Tax Function Effectiveness and Tax Control Framework developments.

Tax Management Consultancy welcomes your opinion on any of the issues raised, so feel free to join in the discussion on LinkedIn | Twitter | Facebook.

Algirdas Šemeta EU Commissioner – Press Conference ECOFIN Council Brussels, 15 May 2012

In Tax News on 26/05/2012 at 8:06 am

Algirdas Šemeta EU Commissioner for Taxation and Customs Union, Audit and Anti-Fraud Statement on Savings Tax Agreements and VAT strategy

I am extremely frustrated that we could not reach agreement today on the mandates to negotiate new and stronger savings tax agreements with Switzerland and the 4 other third countries.

Let me remind you what is at stake here.

These mandates would give us a chance to strengthen our common instruments against tax evasion.

They would open the possibility for new sources of revenue for Member States. Revenues which they are legitimately due. And revenues which they badly need.

This proposal has been on the table for almost a year now. I need not remind you that during the same year, law-abiding citizens have been bearing the brunt of austerity so that budget shortfalls can be met.

Tackling tax evasion is a growth-friendly way of boosting national budgets. How can any Member State possibly justify blocking progress in this area?

It is all the more puzzling given that, at the last Summit, EU leaders called clearly and unanimously for rapid adoption of the negotiating mandate.

I will be blunt.

The position that Austria and Luxembourg have taken on this issue is grossly unfair.

They are hindering 25 willing Member States from improving tax compliance and finding additional sources of income.

They claim that they are protecting their own national interests. This excuse does not stand up.

We are only seeking mandates to negotiate at this stage – to explore how much we can achieve with Switzerland and the other countries.

Any eventual agreement would have to be adopted unanimously. Austria and Luxembourg have every assurance that nothing will be signed without their full consent.

So their resistance against merely opening negotiations is completely unjustifiable.

I leave it to them to explain to citizens across Europe why they can support tax hikes and spending cuts for ordinary people, but won’t allow us to step up our fight against tax evaders.

On a more positive note, Ministers did endorse today the new VAT Strategy which I put forward last December.

This supports the calls from citizens, businesses and administrations for a complete overhaul of the current system. We must make the EU VAT regime simpler, more efficient and more fraud-proof.

If looking for the benefits of such a reform, the figures speak for themselves.

VAT currently accounts for over 20% of Member States’ income. So a better quality VAT system means better quality revenue.

Moreover, if we can address even 10% of the mismatches between Member States’ VAT procedures, we could see an increase in intra-EU trade of almost 4%.

In our VAT Strategy, we set out priority areas for action. These range from taking a fresh look at reduced rates, to creating new anti-fraud tools.

The Commission’s work is already underway on concrete deliverables.

I hope that I can rely on the Council for the same level of support as today when we present proposals for specific measures to improve VAT in Europe.

Comment

The EU Commisioner’s is frustrated about the position taken by Austria and Luxembourg and their defending arguments ‘claiming protecting their own national interests’.

This is what I wrote in ‘Green Paper on the Future of VAT‘ blog about the EU political challenge in general:

We don’t have to hurry as this will take a couple of years before this gets into force. It is all about politics and the right timing again.

Last but not least at the end the Council of all Ministers have to approve.  The real political challenge would be to first agree on and implement the ‘All for One and One for All’ principle.

A bottleneck could be the competition for tax revenues and the perception that somebody else wins. When somebody wins, somebody else must lose.

Related Topics

Richard Cornelisse worked as Big4 Partner in the Tax Performance Advisory and Indirect Tax Practice and now blogs on Tax Function Effectiveness and Tax Control Framework developments.

 

European VAT Refund

In Tax News, VAT planning on 19/05/2012 at 11:40 am

From Deloitte’s European VAT Refund Guide 2012

(new European VAT refund guide 2013 – Deloitte)

“The EU directive that entered into force on 1 January 2010 (i.e. Directive 2008/09/EC) introduced a new procedure for businesses established and registered for VAT purposes within the EU to request a refund of VAT incurred in other EU member states.

The directive allows EU businesses to submit a refund claim via the internet site of the tax authorities of the country in which the claimant is established (the previous system, known as the 8th VAT Directive system, required claims to be submitted in paper and in the country in which the VAT was incurred).

In addition, new deadlines apply for submitting a claim and for the processing of refunds by the authorities.

As under the previous rules, refund requests will be addressed by the member state of refund, the amount refundable will be determined under the deduction rules of that member state and the payment of the refund will be made directly to the claimant by the member state of refund.

While the new procedure should facilitate and expedite the processing of refund claims, businesses need to be aware of deadlines and issues connected with this new process, making any necessary adjustments to their internal systems.

The 2012 European VAT Refund Guide provides detailed information on the technical and practical aspects of this procedure.

The changes made by Directive 2008/09/EC do not affect refund claims by businesses that are not established or VAT registered in an EU member state; such businesses still recover VAT incurred in EU member states according to the procedure in the 13th VAT Directive.

The 2012 Refund Guide also contains information on this procedure.

EU Businesses (Directive 2008/09/EC)

Making Claims

Minimum amounts

Member states can set the minimum amount that may be recovered under each VAT refund application. The minimum for annual applications, or applications for the final part of a year, is EUR 50, but for interim applications, it is EUR 400. The table shows the current limits in each member state. Items omitted from earlier interim applications usually can be included in later applications filed in the same year.

Time limits

The application period is on a calendar year basis and the application form must be submitted by 30 September of the following year (different due dates may apply for quarterly refunds).

However, applications may relate to a period of less than three months where the period represents the remainder of a calendar year.

Procedure

Filing

As a general rule, the refund application must be submitted electronically through the tax portal of the tax authorities in the country in which the claimant is resident at the latest on 30 September of the calendar year following the refund period. The deadline will not be extended.

IT requirements

All refund claims submitted according to the procedure in Directive 2008/09/EC must be filed electronically. However, the method of filing, certifications, files accepted and other IT requirements vary from country to country.

Supporting documentation

In the first phase of an application, most member states do not require any documentation other than the application form (filed in the country of residence). Once the application has been transferred to the state in which VAT was incurred, that state can request additional documentation, such as invoices (originals or copies), import documents or other supporting documents.

It should be noted, however, that the European Court of Justice recently ruled that, in some cases, a nonresident business should be able to submit duplicate tax invoices where the originals have been lost for reasons beyond its control.

Refunds And Appeals

Another important change introduced by Directive 2008/09/EC is the introduction of fixed time limits for the tax authorities to issue a decision on refund claims.

The member state of refund has four months to decide on the application, starting from the day it confirmed receipt of the refund claim. The term is extended when additional information is requested and the claimant will be required to provide the information within one month.

Once the member state of refund receives the additional information, it has two months to decide on the claim.

If the claimant does not provide the information requested, the member state of refund must decide on the claim within two months after the one-month period expires for the claimant to respond.

The directive also states that when additional information is requested by the member state of refund, it has at least six months to issue its decision on the claim. When additional information is requested (after a first request), the final decision should be made within eight months of receipt of the application.

Once the tax authorities decide to issue a refund, it must be paid within 10 business days after expiration of the above deadlines. If payment of the refund is delayed, the tax authorities will have to pay interest.

Non-EU Businesses (13th Directive)

The rules for non-EU businesses are similar to those for EU businesses, except that:

  • Bulgaria, Cyprus, Czech Republic, Estonia, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Switzerland and the U.K. do not allow claims unless there is a reciprocity agreement or treatment for the recovery of VAT and other turnover taxes with the country in which the non-EU business home is established.
  • U.S. businesses that are not registered in Luxembourg can recover VAT incurred on or after 1 January 1999. For recovery of VAT incurred before this date, Luxembourg requires a reciprocity agreement with the home country of the non-EU business.
  • A fiscal representative (for VAT refund purposes) may need to be appointed in some member states.
  • Non-EU businesses usually must support claims with a certificate of taxable status rather than a certificate of VAT status. This should indicate that the non-EU business is a taxable person for business purposes in its own country. For example, the appropriate U.S. form is IRS 6166.

Additional conditions may apply by individual member states to allow non-EU businesses to recover VAT.”

Access country overviews via Deloitte – European VAT Refund Guide 2012

European Commission’s E-learning Module

  1. VAT Refund Electronic Procedure
  2. E-learning Module By The European Commission (Course On The VAT Directive)
  3. VAT Directive
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