Easing cross-border VAT returns for business


On 23 October 2013, the Commission proposed to standardize VAT returns obligations for businesses from 2017 onwards. It is dubbed as a win-win situation for both private and public sectors.

The Commission proposes to limit the number of information boxes to five standardised ones applicable in all EU Member States – i.e. chargeable VAT, deductible VAT, net VAT amount (payable or receivable), total value of input transactions and total value of output transactions. The Member State however, do have the option to add a maximum of 21 types of additional information. To simplify matters, the VAT forms will be available in all official EU languages. The EU Commissioner, Algirdas Šemeta, also proposes to harmonise the periodicity of VAT returns and reimbursements, procedures for submitting corrections and the format of electronic submission of returns. In the present situation it can be the case that a company has to submit its VAT obligations per month in one country, whilst it could be on a quarterly base in another.

For business, it means cutting red tape as there is one overall VAT returns scheme for all EU Member States to be filed at fixed times. It is estimated that it would save about €15 billion a year for business. Moreover, the Commission encourages the electronic submission of VAT return schemes.

With these electronic VAT return schemes, the public administrations have easier sight on monitoring tax compliance obligations of businesses. A 2011 study of the Commission showed that the authorities were still left with a stunning €193 billion gap caused by tax evasion or ineffective tax compliance schemes.

The proposal follows the comprehensive VAT reform, launched by the Commission in December 2010. It adheres to the aims set in this reform which were to make the system “simpler, more efficient and more robust against fraud, and better tailored to the Single Market.”

The reaction of the Association of Chartered Certified Accountants was positive. “It represents a step in the right direction to help companies, especially small ones, to make the most of – and possibly expand – their business opportunities in the single market,” according to Chas Roy-Chowdhury, head of taxation of ACCA. The proposal will contribute to transparency and facilitate more coordinated exchanges of information between national administrations.