The report by Olivier Chastel (Renew Europe, Belgium) examining the functioning of the VAT directive (2006/112) and analysing the VAT gap within the European Union was adopted by a large majority (510 votes in favour, 74 against, 108 abstentions) by MEPs at the European Parliament plenary session on Wednesday 16 February.
The VAT gap is the difference between the amount of expected VAT revenue and the actual VAT collected.
According to the report, the wide range of reduced VAT rates for businesses is problematic and hurts the EU budget, businesses and European citizens.
“This complexity leads to opacity, compliance costs, errors as well as fraud. It severely limits the coherence and interoperability of the VAT system and has caused the EU to lose some €134 billion in 2019”, said Mr Chastel, during the debate on Monday 14 February.
MEPs support the idea of extending the scope of the one-stop VAT shop, which has been in place since 2015. Expanding electronic invoicing to a single European standard that harmonises the information contained in the invoices would facilitate cross-border interoperability, according to the report. It would also ensure legal compliance and transparency of business transactions by limiting fraud and errors.
Through the tax package presented by the European Commission at the end of 2021, and following the agreement with the OECD on international tax reform, “the European Commission intends to promote proposals to combat VAT fraud and tax avoidance”, assured Kadri Simson, the Commissioner for Energy, during the debate.
In particular, the report emphasises the need to move to a definitive VAT system based on the principle of taxation in the country of destination. With this vote, the European Parliament called on the EU Council to adopt as soon as possible the 2018 proposal for a directive that allows for the transition to a definitive VAT system based on the principle of taxation in the country of destination (see EUROPE 12027/3).
To read the report: https://bit.ly/3BsoGIT (Original version in French by Anne Damiani)