On Thursday 24 November, the European Parliament gave its support to the European Commission's approach to the VAT regime, adding its voice to the calls for a regime based on the country of destination.
Parliament's support was expressed in the adoption of the legislative regulation submitted by Germany's Werner Langen (EPP), by 459 votes in favour, 87 against and 74 abstentions, at the plenary session in Strasbourg.
"VAT is a consumption tax which has to be paid by the final consumer. VAT must be collected where the consumer is, not where the merchant is", Langen commented, after the vote.
Contrary to the outcome of the vote at the parliamentary committee, the resolution adopted calls for greater discretion for the member states in implementing the VAT rate. At the parliamentary committee, on the other hand, the text called for greater convergence.
Parliament is also calling for a better exchange of information between the tax authorities of the member states in order to avoid tax fraud. In September of this year, the Commission calculated that in 2014, nearly €160 billion in VAT revenue was lost in the EU due to legal tax optimisation, fraud, errors, imprecision and negligence as well as payment delays or insolvencies. The report does not take a decisive stance in favour of a reverse-charge mechanism, as has been called for by several member states, most notably Germany, Austria and the Czech Republic.
"We need to end the 23 years of the preliminary solution. The VAT system we have now was never meant to be permanent. Now the Commission and member states are on the ball. Only reform can bring justice to the VAT system", Langen concluded.
The Commission will present a VAT package next week. (Original version in French by Élodie Lamer)