Anti-VAT fraud initiatives get Parliament vote
The European Parliament voted on 16 February 2022 in favour of harmonising pan-EU e-invoicing and supporting the adoption of the definitive VAT system reform to:
- facilitate cross-border interoperability;
- ensure legal compliance;
- increase transparency in commercial transactions; and
- limit fraud and errors.
The Parliament acknowledged that member states are already adopting various forms of e-invoicing and live reporting. But that this should be coordinate to promote ease of adoption by businesses and efficient exchange of tax data. Any parliamentary vote is non-binding on member states of the EU.
Other measures backed by Parliament tied to the 2019 EU Tax Action Plan and EU VAT reforms:
- Boost intra-tax authorities communications and admin cooperation to detect fraud
- Flexibility of reduced VAT rates;
- Expand EU Single VAT Registration via OSS return
- upping the legal status of the VAT Committee
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Switch to definitive VAT system
The Parliament restated its support for the reforms of the current ‘temporary’ origin-based VAT rules for B2B goods transaction. This was open to criminal fraudsters using the zero-rating intra-community supply process to collect billions in VAT. And creates complexity and costs for law-abiding businesses. The 2018 draft definitive VAT regime proposes to move to a destination-based model, supported by easier ways to report and remit that VAT. However, many member states have objections to the proposal which is effectively blocked.
EU digital reporting requirements proposals
EU VAT in the Digital Age reforms include a channel for harmonised Digital Reporting Requirements (DRR) and Continuous Transaction Controls (CTC)
by EU states. This grew from the 2020 EU Tax Action Plan proposals for a fairer and more efficient EU tax regime.
