VAT Committee Updates Guidelines

On 28 April 2022, the list of guidelines resulting from meetings of the EU VAT Committee was updated and published by the European Commission. The updated list of guidelines includes agreements reached by the VAT Committee on VAT groups, when the principal establishment and the branch of a company are situated in two different member states, and on the place of supply of liquefied natural gas.

European Commission Reports on VAT Registration and Publishes Recommendations to Improve VAT Collection

The European Commission has published its latest Screening and Diagnostic Report of VAT Administration in the EU. The report points out experiences and best practices in dealing with VAT administrative issues and recommends digitalising VAT registration and administration. The commission also outlined 39 recommendations for EU member states to improve their VAT revenue collection, control procedures and processes, including calculating and analysing the national VAT gap and its different components, inform taxpayers online about their VAT-related obligations, and provide for online registration, etc. The report covers the 2016–2019 period, and it was prepared on the basis of Article 12 of Council Regulation 1553/89 that tasks the commission to assess, every three years, the national procedures for registering taxable persons and determining and collecting VAT, as well as the modalities and results of national VAT control systems.

European Commission Adopts Implementing Regulation to Combat VAT Fraud in E-Commerce

The European Commission has adopted an Implementing Regulation that provides essential details for payment service providers on how to report payment data to EU member states in a harmonised format. This information is intended to be centralised in a European database, the Central Electronic System of Payment information (CESOP), where it will be stored, aggregated, and cross-checked with other European databases. All information in CESOP will then be made available to anti-fraud experts in each EU member state via a network called Eurofisc. The only information to be transmitted to the tax authorities is that related to payments linked to an economic activity. Information on consumers and the reason underlying the payment will not be part of the transmission. The Implementing Regulation also lays down the functionalities of CESOP, which will start operating on 1 January 2024.

European Council Greenlights Negotiations to Strengthen European Union’s Cooperation with Norway in Fight Against VAT Fraud

On 26 April 2022, the European Council authorised the European Commission to open negotiations to amend the EU-Norway Agreement on administrative cooperation, combating fraud and the recovery of claims in the field of VAT. Despite the intention for closer cooperation, the negotiations should not lead to Norway having access to the databases of EU member states.

European Court of Justice, “DSR – Montagem e Manutenção de Ascensores e Escadas Rolantes,” Case C-218/21 – Whether Reduced VAT Rate Can Be Applied to Lift Repair and Maintenance Services

The European Court of Justice (ECJ) has ruled that the point 2 of Annex IV to Council Directive 2006/112/EC of 28 November 2006 on the common system of VAT must be interpreted as meaning that the concept of “renovation and repairing of private dwellings,” within the meaning of that provision, covers repair and renovation services for lifts in residential buildings, excluding maintenance services for such lifts.

European Court of Justice, Case C-714/20, Joint and Several Liability of Importer’s Indirect Representative to Pay Import VAT

The ECJ has ruled that Article 77(3) of the Union Customs Code (2013/952) must be interpreted as meaning that, on the basis of this provision alone, an indirect representative is only liable for customs duties and not import VAT. In this sense, Article 201 of the Principal EU VAT Directive must be interpreted as meaning that an indirect representative is only liable for the payment of import VAT if explicitly and unambiguously designated or recognised as being liable for this tax by national provisions.

Extension of Period of Validity of the Optional Reverse Charge and Quick Reaction Mechanism Against VAT Fraud

The period during which the optional reverse charge mechanism and the quick reaction mechanism in relation to intra-community supplies of certain goods and services susceptible to VAT fraud can be applied has been extended by the European Parliament.

Czech Republic Authorised to Raise VAT Exemption Threshold for Small Businesses

The European Council has authorised the Czech Republic to apply a VAT exemption to taxable persons whose annual turnover is no higher than EUR 85,000 to avoid distortions of competition in the Czech market. It will remain optional for taxable persons. The measure is applicable from the date it is published in the Official Journal of the European Union until 31 December 2024.

GFV Discusses Distance Sales of Goods, IOSS Abuse, and the VAT Treatment of the Platform Economy

The Group on the Future of VAT (GFV) held its 38th meeting on 6 May 2022 to discuss, among other things, the VAT treatment of returned goods in the context of distance sales, abuse of the IOSS VAT identification number following the implementation of the e-commerce VAT package, the VAT treatment of the platform economy, and the need for e-invoicing as part of VAT in the Digital Age initiative.

Successful VAT Revenue Figures After the First Six Months of Application of the E-Commerce Package

The European Commission has announced successful VAT revenue figures after the first six months of implementation of the e-commerce package in the European Union. EU member states collected:

• EUR 6.8 billion in VAT revenues via the expanded One Stop Shop (OSS) portals
• More than EUR 2 billion in VAT revenues on imports of low-value consignments not exceeding EUR 150 (of which almost EUR 700 million represented new VAT revenue generated by the abolition of the VAT exemption previously applied to imports of low-value goods not exceeding EUR 22)
• An estimated EUR 270 million in VAT as a direct result of the IOSS as a measure to counter VAT fraud and VAT losses because of undervaluation

European Commission Closes Infringement Procedure Against Lithuania Regarding Transposition of VAT E-Commerce Package

The European Commission has announced that it has closed the infringement procedure against Lithuania regarding the lack of clarity in the transposition of the VAT e-commerce package into national law, without explicitly stating the reasons for closing the procedure.