Brussels, 16/05/2006 (Agence Europe) - On 16 May, the Commission proposed extending until 31 December 2008 directive 2002/38/EC, which amends the sixth VAT directive (77/388/EEC), on value added tax (VAT) applicable to radio and television broadcasting services and some electronic services. This measure was announced at the start of May by Lásló Kováks at the last Ecofin Council, given over in part to the legislative package simplifying VAT rules (see EUROPE 9186). “I cannot imagine that we would revert to the rules prevailing before the e-commerce directive was introduced”, said the Commissioner responsible for taxation in a press release.
The directive has been in force since 2003 and allows for electronic services to be subject to VAT when supplied for consumption within the European Union, and exempted from VAT when supplied for consumption outside the EU. It creates a one-stop shop for third country operators who benefit from simplified registration and reporting obligations allowing them to deal with a single European tax administration of their choice.
The provisional extension of directive 2002/38/EC should allow time for the adoption of the VAT package currently on the Council's table. This package gradually introduces a voluntary electronic system for companies which operate cross-border to make VAT returns. This one-stop shop would permit those subject to the tax to fulfil all their tax commitments in the Member State where they are established. Mr Kovács said, “I also request support from the EU Council to adopt as soon as possible the two proposals on the place of taxation of services and on the One Stop VAT Shop scheme”.
The Commission report on the implementation of directive 2002/38/EC concludes that the directive is working satisfactorily and has met its aim of creating a level playing field for the taxation of electronic services.