Brussels, 04/11/2004 (Agence Europe) - The European Commission will present its plan for simplification of the value added tax (VAT) declaration formalities during the Ecofin Council of 16 November. It has identified six measures that are the object of two draft directives and a proposal of regulation. The idea of an optional electronic one-stop-shop system is gaining ground. The proposal would harmonise at EUR 100,000 the maximum threshold below which companies, and especially small and medium-sized companies (SME), can be exempt from VAT.
A one-stop-shop system for VAT declaration formalities would allow companies carrying out cross-border activities to fulfil their obligations solely in the Member State where they are established. It would be entirely electronic but would remain optional for companies being taxed, whether they are European or from third countries. It would have the advantage of greatly limiting the number of compulsory declarations and reducing procedural delay by half, from six to three months. Should such deadlines not be respected, the Member State incriminated would pay monthly interest equivalent to 1% of the amount normally due.
In practical terms, companies concerned would have a single VAT identification number, that of the Member State on whose territory they are established. They would submit their declaration forms to the tax authority of the Member State of establishment by electronic means. The information would be forwarded automatically to Member States where the goods supplied and/or services rendered are consumed, which would directly recover the amount of VAT. These States would nonetheless maintain the right to verify the validity of statements in the companies concerned.
The one-stop-shop concept is part of the Commission's VAT strategy, which aims to simplify European legislation currently in force. Results of public consultation in 2003 reveal that the companies and tax administrations are in favour of a one-stop shop system but that they refuse global harmonisation of VAT obligations. The Commission launched a new specific public consultation in May this year on the subject of one-stop shops. Closed on 31 July, conclusions to the consultation have not yet been made. Nonetheless, the investigation on taxation in Europe, conducted in 700 companies and published in September, showed once more the interest that economic operators have in such an initiative.
The five other concrete measures proposed by the Commission are:
The introduction of a one-stop-shop system for those liable to tax but not established (within the country where the declaration must be made);
Harmonisation of the scope covered by goods and services for which Member States are authorised to limit the right to deductions: - spending relating to on-road motor vehicles, vessels and aircraft, travelling expenses, housing, food and drinks as well as luxury spending and leisure and representation, would benefit from this exemption;
Extended use of the self-liquidation mechanism, making the client enterprise liable to tax, for some intra-company transactions by taxable persons not established in the territory;
Revision of the special system applicable to SME: below a maximum threshold of EUR 100,000, SMEs would not be liable for VAT;
Simplification of the rules applying to distance selling: from a threshold of EUR 150,000, the rate of VAT applicable would be that of the Member State of destination.