A packed taxation agenda is taking shape for the European finance ministers, who are to meet in Brussels on Friday 25 May. The Bulgarian Presidency hopes to conclude unanimous agreements on three dossiers on value-added tax (VAT).
Administrative cooperation in VAT matters
The first dossier - and also the one on which there is the greatest agreement - concerns the proposed regulation on administrative cooperation in the fight against VAT fraud (see EUROPE 11680). In a document dated 18 May - of which EUROPE has had sight - the Presidency suggested a few additional changes in order to facilitate the compromise.
Readers may recall that one controversial issue consists of determining how many member states should ask one of their peers to open an administrative enquiry.
The Presidency proposes that where the competent authorities of at least two member states consider that an administrative enquiry is necessary and present a common reasoned request “containing indications or evidence of risks of VAT evasion or fraud”, the requested authority will only be able to refuse to undertake the enquiry on the grounds set out in regulation.
Another modification concerns the request for information and aims to clarify the subject of the consultation if, during an administrative enquiry on the territory of a member state, civil servants of at least two other member states are present.
“The purpose of such consultation could be to exchange views and information about the development of the enquiry and to propose and discuss possible actions”, the text explains.
It also provides the possibility for member states to notify relevant information to the European anti-fraud office (OLAF). However, it stipulates that if this information comes from another member state, its transfer to OLAF may require the prior agreement of that member state.
Finally, on the ‘data protection’ plank, the Presidency proposes that adopting restrictions in the field of data protection be compulsory, as long as these restrictions are limited to what is strictly necessary to safeguard the objective of tackling VAT fraud.
Reduced rates for electronic publications and reverse-charge systems
The Bulgarian Presidency also hopes to reach an agreement on two other VAT dossiers, which are far more controversial: - applying reduced rates to electronic books (‘e-books’); - authorising certain member states to carry out pilot projects for a general reverse-charge mechanism with a view to preventing VAT fraud (see EUROPE 11692).
Readers may recall that at the Ecofin Council of June 2017, the ministers failed to reach any agreement on either text (see EUROPE 11810).
What is causing the stalemate is a disagreement between France and the Czech Republic. The latter vetoed the text on e-books because France has an opposition in principle to the proposal to allow Prague to conduct a pilot project for a reverse-charge VAT mechanism (see EUROPE 11692). France considers that this system runs counter to the Treaty on the Functioning of the EU (see EUROPE 11742).
On these texts, it is largely recognised that the problems are now political rather than technical.
At the meeting of the high-level group on taxation of 16 May, most delegations said they were prepared to accept the same compromise text as that presented to the Ecofin Council of June 2017. However, some kept their reservations in place, while none made any technical comments on the compromise text, the Council explained in a note on the reverse-charge dossier dated 18 May.
The fates of the two proposals are intertwined: if France lifts its veto on the reverse-charge mechanism, the proposal for reduced rates on e-publications could also be the subject of an automatic agreement, as the only remaining reservation on it is that of the Czech Republic.
It will not be until after the meeting of the national ambassadors to the EU (Coreper) on Wednesday 23 May that it will be known whether these points will stay on the ministers’ agenda. (Original version in French by Marion Fontana)