Changes in VAT 2015 – proposal of European Commission

Intertax came at information regarding the proposed by the European Commission changes in EU rules on VAT 2015. The Commission’s proposals concern mainly trade between companies within European Union and concern not only  simple transactions but also triangular transactions and call-off stocks.

The aim of the changes is to improve the scheme of taxation. However, it contains also significant change aimed at increase of documentation required from supplier. For the purposes of applying zero VAT rate, the supplier  would need to have not only the invoices but also other evidence that the transaction occurred.

The most far-reaching concept envisages  a revolution in intra-Community supplies. The idea is based on the assumption that the VAT on such transactions would be collected by a country of the buyer, with which the contract is concluded, but would be accounted for by the supplier from another EU country. The suppliers would not have to register in every EU country in which they have clients but they would account for this tax with their national tax authorities, who would transmit collected amounts to the relevant Member States. This solution, called the one-stop-shop, would mean the suppliers need to fill in their country more extensive VAT return.

This above scenario also provides exceptions to release the supplier from accounting for the VAT in another country. If the recipient was given a honest taxpayer status, confirmed by an appropriate certificate, he could charge VAT himself instead of the supplier.

Many of the Commission’s proposed solutions may look as increase of the documentary and procedural formalism. One of the primary objectives of these reforms, however, is the unification of rules among EU countries and resolving the difficulties in intra-EU trade. The changes should also help to reduce the risk of tax evasion causing enormous damage to the member countries.