Brussels, 09/11/2005 (Agence Europe) - On 8 November, the Ecofin Council was informed of progress in work within the "Taxation Issues" group on three legislative proposals- two directives and one regulation- aiming to simplify obligations in terms of value added tax (VAT) for companies with cross-border activities (EUROPE 8821). We have discussed the question of creating a "one-stop shop system to make it easier to collect VAT payments", said Council President Gordon Brown, adding: "we are making good progress" and "we hope to see additional progress for December". Austria will make this dossier a big priority for the first half of 2006.
The UK Presidency has adopted an approach divided into three planks: 1) the reform of the tax refund system; 2) four simplification measures; 3) the "one-stop shop" system. On the first point, the Commission is proposing to reduce the timescale for refunds of tax paid upstream for cross-border transactions. The "Taxation Issues" group agreed to modify the legal basis for the future directive, using article 93 of the treaty, which requires a unanimous decision of the Council.
The second plank focuses on four measures: modification of the regime applicable to distance sales, extension of recourse to the obligatory self-liquidation mechanism, introduction of greater flexibility in setting a registration threshold, alignment of rules on deduction rights for upstream tax. The "Taxation Issues" group agreed to remove the proposed changes to the regime applicable to distance sales and the self-liquidation mechanism. According to the Presidency, three Member States have refused to accept the compromise on the registration threshold.
On the "one-stop shop" system, the Presidency "wanted to be certain, as a priority, that all delegations understood the end purpose of the system and its effects in the same way, before modifying the legislative text". It will issue thematic documents with a view to drafting a proposed compromise at a later date. Under the Commission's proposal, the one-stop shop system will allow companies with cross-border activities to acquit their obligations only in the Member State where they are established. The system, which is fully electronic but optional, will greatly reduce the number of obligatory declarations and the lead-times for the procedure. Businesses will have just one VAT identification number, that of the Member State of establishment. Declarations will be automatically transmitted to the countries where the goods and/or services are consumed, which will directly recover the total VAT payable.