As the six-month French Presidency of the Council of the EU ends, it reviews progress to date on a range of VAT measures
France took up the rotating Presidency role on 1 January 2022, and has provided an update on various EU VAT reforms. The main points included:
- Implementation of the VAT e-commerce package – including work of improvements to the new IOSS reporting regime.
- The VAT in the Digital Age reforms are progressing following the e-commerce package success. VAT Directive ammendments should be completed this Autumn.
- Definitive VAT system – which is remains parked given member states concerns over the impact of requiring VAT to be charged for the first time on B2B intra-community supplies to tackle VAT fraud. Further analysis is underway, but this will not hinder the progress of other reforms
- VAT rates reform – on 6 April 2022, member states ratified new reduced VAT rate setting freedoms. These must be adopted by member states before 1 January 2025.
- Extra powers for VAT Committee – this would give comitology status to the Committee and enable it to enforce EU VAT rules more widely to reduce confusion and the backlog at the European Court of Justice on minor VAT rulings. Whist member states support this idea, they remain unsure of the shift of powers from the Council to the Commission and moving towards qualified majority voting. Other routes to improve the issues will be reviewed.
- VAT reverse charge extension – in light of the lack of progress on the Definitive VAT System, the existing application of the optional reverse charge mechanism of fraud-prone goods and services has been extended to 31 December 2026.
- VAT registration, collections and control procedures – this regular report on the efficiency of individual member states’ VAT compliance process was published in May 2022. If found many areas for improvement although praised Sweden and Finland.