EU Commission Launches Consultation Exercise On VAT

by Ulrika Lomas, Tax-News.com, Brussels

28 May 2003

A consultation exercise has been launched by the European Commission on how the cumbersome pan-European VAT rules can be improved to make life easier for businesses conducting trade with EU partner states.

The Commission outlines the goal of this mission on the europa website, which is to "provide a report on the current status of the review of the place of supply of services rules and outline the framework in which the work has progressed. In response, the European Commission is seeking reactions and input on the proposed framework and related issues."

The Commission continues: "This consultation is of interest to suppliers of services to taxable persons (i.e., B2B supplies) and their customers as it considers the idea of a shift in the underlying principle of the existing legislation; that is, a change from the origin principle to the destination principle with respect to the place of taxation of services supplied to taxable persons.

Such a change could result in increased use of a system whereby the customer becomes liable to pay the tax (self-assessment or reverse charge), decreased cross-border registration and additional administrative demands (e.g., the possible corresponding extension of the VAT Information Exchange System (VIES) to services)."

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