Brussels, 28/11/2007 (Agence Europe) - A new compromise proposal on the VAT package was on the table of the member states ambassadors to the EU meeting on Wednesday 28 November. This proposal aimed to bring on board Luxembourg, the only national delegation which is still rejecting parts of the legislative package: the modification of the place of service - and therefore of taxation - for certain electronic and telecommunications services provided across borders to non-VAT-liable persons (“B to C”) (see EUROPE 9542).
According to our information, the Portuguese presidency proposed to Luxembourg the postponement to 2015 of the entry into force of the new rules for certain electronic “B to C” services. From 1 January 2015, a revenue retention mechanism will be introduced to allow the member state where a service provider is based to retain 20% of the revenue from value added tax (VAT). This is justified by the involvement of the member state of establishment in controls of tax-liable persons and the necessary compensation of administrative costs associated with collecting VAT from the provider. Although the member states have been accepting of a delay to the entry into force of the new rules, the large majority of them have so far remained opposed to the shared mechanism wanted by Luxembourg. In June the finance ministers committed to closing this dossier before the end of 2007. The Ecofin Council of Tuesday 4 December will therefore be crucial. (M.B.)