ECOFIN - VAT Proposals Not Adopted
At the recent Economic and Financial Affairs Council (ECOFIN) meeting a number of issues were discussed. There were three main VAT related debates and despite productive talks full agreement was not reached on any of them and therefore they were not adopted.
The first was a proposal aimed at strengthening administrative cooperation in order to better prevent VAT fraud. This would be done primarily by improving the exchange and analysis of information shared by the member states’ tax administrations and with law enforcement bodies.
Secondly, the Council discussed a proposal that would allow member states to apply temporarily a generalised reversal of VAT liability (‘reverse charge’ mechanism) in order to better prevent VAT fraud. The proposal would offer a short-term solution for containing fraud, pending implementation of the proposed new VAT system whereby supplies will be taxed in the country of destination. It would apply to all domestic supplies of goods and services above an invoice threshold of €10,000.
Finally, the Council discussed a proposal that would allow member states to apply reduced VAT rates to electronic publications. The proposed directive is aimed at aligning VAT rules for electronic and physical publications, thereby contributing to the EU’s ‘digital single market’ plan.
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