Luxembourg, 17/10/2000 (Agence Europe) - The Ecofin Council adopted without debate, on Tuesday, a directive aimed at simplifying the Community legislation in force on VAT (value added tax) payments. The text will, as of 1 January 2002, "simplify the life of companies in that they will no longer need a tax representative" in the countries where they are established, said French Finance Minister Laurent Fabius.
Tax representation has proved to be a complex system that is also binding and costly for economic operators, who have often complained that it is a major hindrance to the smooth functioning of the internal market. The new directive will make this formality optional, by fixing as a general rule that the only person who should pay the tax is the person liable whether or not established in the Member State where the taxable operation is carried out. For operations between VAT payers, the Member States will keep the possibility of providing for the taxable client to have to pay VAT in the place of the supplier, when the latter is not established in that country, in order to ensure that tax obligations are fulfilled.
"I can but express delight at the adoption of this directive, that will eliminate VAT formalities that are very complex, binding and costly for millions of companies within the internal market", commented Frits Bolkestein, European Commissioner for Taxation. "It is now a question of working towards the adoption of other proposals aimed at simplifying the VAT regime, mainly concerning the right to deduct tax from operators not established in that country". The directive approved is part of a series of projects presented by the European Commission a few years ago. Three are still on the Council table. They cover improvements to mutual recovery assistance, the modification of the status of the VAT committee and the introduction of a right to crossborder deduction. The draft directive presented more recently by the European Commission on VAT applicable to online commercial transactions (also on the agenda of Tuesday's Ecofin Council) is part of the same strategy for modernisation of the VAT regime, and other initiatives are expected concerning above all taxation of postal services or the invoicing of VAT by electronic means (see EUROPE of 15 June 2000, p.12).