EC Consults On 'One-Stop Shop' VAT Proposals

by Ulrika Lomas, for LawAndTax-News.com, Brussels

20 May 2004

The European Commission announced on Tuesday that it has launched an open consultation for views on a one-stop shop system, whereby a trader could fulfil his Value Added Tax (VAT) obligations for his EU-wide activities solely in the Member State in which he is established.

The consultation is set to run until 31st July, and is based on proposals which would allow a trader to use a single VAT number for all supplies made throughout the EU and to make VAT declarations to one single electronic portal that would then be submitted automatically to the different Member States into which the trader supplies goods or services.

According to the EC, recent studies have concluded that VAT obligations are at present extremely burdensome for cross-border traders who are often unfamiliar with the tax procedures and arrangements in countries other than their country of establishment and often also encounter language difficulties.

Confirming this, Frits Bolkestein, Commissioner for the Internal Market and Taxation observed that:

"The present onerous VAT compliance obligations deter small companies and individual traders in particular from engaging in cross-border business."

He went on to add that:

"We would like to obtain the views of stakeholders before making a proposal for a simplified electronic one-stop shop system that would be designed to enable all traders to benefit fully from the Internal Market."

The opinions expressed during the present public consultation would be taken into account in a proposal on this subject, due to be presented by the Commission at the end of this year.

This follows a recent call by the European Federation of Accountants (FEE) for an overhaul of the European VAT system, in order to reduce revenue lost to fraud and inefficiencies.

In a statement released following a Round Table meeting of tax experts from across Europe organised by the Federation last week, the FEE argued that the overly complex nature of the current VAT system facilitates fraud, loses revenue for EU member states, and increases the cost burden for European businesses.

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