The European Commission published its report reviewing and diagnosing the administration of value added tax (VAT) in the European Union on Thursday 7 April, and issued a series of recommendations to help Member States improve tax revenue collection, procedures and control processes.
VAT accounts for around 7% of EU GDP and is one of the main sources of revenue for Member States. However, the loss of VAT revenue represents a significant loss of earnings, estimated at €134 billion in 2019.
The report provides an overview of current VAT practices in EU countries and highlights experiences and best practice in dealing with administrative issues.
Among its recommendations, the European Commission proposes: - to digitise the registration and administration of VAT; - strategies that tax administrations could adopt in their internal organisation and interaction with taxpayers; - to strengthen audit and compliance measures. It believes that these practices would improve processes for both tax authorities and businesses.
National tax administrations also need to step up their efforts in areas such as risk analysis, process automation and information exchange.
The European Commission also calls on Member States to apply the current recommendations in order to create a level playing field in the internal market.
See the European Commission’s report: https://aeur.eu/f/164
Reduced rates. On Tuesday 5 April, the Council of the EU adopted the revision of the VAT Directive. The reform, backed by the Parliament (see EUROPE 12907/18), will give Member States more flexibility in applying reduced and zero VAT rates, and will phase out preferential treatment for environmentally harmful goods. (Original version in French by Anne Damiani)