In their final conclusions on employment, growth and competitiveness on Thursday 28 June, the heads of state or government reiterated their commitment to ensuring fair and effective taxation.
However, a last-minute addition was made to the text and almost went unnoticed. The European leaders have in fact undertaken to continue the work on ways of ensuring “effective VAT collection, including swift progress on the Commission proposals on short-term measures”.
According to our information, it was the Czech Republic that called for this addition, with progress on the reverse-charge mechanism in mind. According to several sources, these short-term measures could also refer to the four 'quick fixes' proposed pending a replacement for the current 'temporary' VAT regime, on which the ministers failed to agree last week (see EUROPE 12047).
The Czech Republic is reported to have caused a bit of confusion around the table with its request, with some expressing concerns that the addendum would water down the reference to the taxation of the digital sector (see EUROPE 12049) - which is important to France and was maintained. Finally, the version proposed by the Czech Prime Minister, Andrej Babiš, was used with no changes.
On the reverse-charge mechanism, negotiations will now continue between the Czech Republic, France and Slovenia, with some progress to report.
Readers may recall that in June 2017, the Czech Republic vetoed the text on VAT applicable to e-books in response to France, which had an opposition in principle to the proposal to allow Prague to carry out a pilot project for a reverse-charge VAT mechanism (see EUROPE 11810). No agreement could be reached between the ministers in May (see EUROPE 12027).
Negotiations between France and the Czech Republic are now easier and it is the Slovenian Parliament's position that is reported to be a problem. However, an agreement is nonetheless hoped for at the 'Ecofin' Council of July, the agenda of which does not include the 'e-books' dossier. (Original version in French by Marion Fontana)