TMF Group's VAT expert asks: with so many countries wanting to lead the way in this field will it be easy for everyone to reach a consensus quickly?

Today (10 September) marks the end of a three-day conference in Dublin attended by all 28 EU member states' tax authorities, business representatives and industry bodies. The purpose of the conference was to look ahead in order to lay down the groundwork for future legislative VAT proposals.

Patrice Pillet, head of the VAT legislation sector at the European Commission, made it clear at the outset that the conference would not be about making decisions, but about discussion, brainstorming and arriving at conclusions which are realistic and can therefore be put in practice.

Some of these conclusions include:

  • Removal of small consignment exemption
  • Improvement and expansion of MOSS
  • Simplification for microbusinesses

Emphasis was placed on the Digital Single Market (DSM). Considered as one of the top 10 objectives of the Juncker commission and being one of the fastest growing markets, it was overdue some attention. And with VAT being identified as one of the major barriers to e-commerce it is becoming more important, and apparent, that businesses within this sector need support.

As of 1 January 2015, the place of supply of e-services, telecommunications and broadcasting services on business-to-consumer transactions forced businesses to pay VAT in the member state of the consumer, rather than that of the buyer. This meant that companies who previously had to worry about compliance in one country had to instantly consider VAT compliance requirements in countries where these companies were selling to.

Additionally, conversations at the conference revolved around the lack of threshold under which businesses affected by the above changes do not pay VAT. Let's not forget that this legislation was a major shock to the system for many microbusinesses, especially in the UK. Unfortunately plans to introduce a standard threshold for these types of sales (around EUR 10,000) did not go down well with conference delegates and the conversation was swiftly moved to other ways in which levelling the playing field can be achieved.

The conference was an excellent platform to decide on what needs to be done in order to tackle some of the issues faced by microbusinesses operating in the DSM. Attention will now turn towards practical aspects of implementing some of the solutions the European Commission wants to use to move forward. With time ticking and microbusinesses losing money because of difficult compliance the pressure is most certainly on decision makers within the European Commission, but with so many countries wanting to lead the way in this field will it be easy for everyone to reach a consensus quickly?

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