European Commission Calls For More Uniformity In EU VAT Rules

by Ulrika Lomas, Tax-News.com, Brussels

28 October 2004

The European Commission has proposed a new regulation to ensure more uniform application of European Union VAT rules in a bid to provide more transparency and legal certainty to both traders and national tax administrators.

According to the Commission, the proposed regulation seeks to ensure consistent interpretation of VAT law in a number of areas, including: the place of supply, and therefore taxation, of various types of services; definition of specific goods and services which should be exempt from VAT; calculation of the amount that should be considered the ‘taxable amount’ for VAT purposes; the definition of electronically supplied services; and the accounting details for the special simplified arrangements for the application of VAT by non-EU suppliers of electronic services.

Until now, consistency in the VAT treatment of a limited number of specific cases has been reached through guidelines drawn up by an Advisory Committee of experts.

However, these guidelines have no legal status and are not binding on tax administrations. Nor are the guidelines published, meaning traders do not have access to them.

“This proposal is an element of the Commission’s strategy to improve the operation of the VAT system” explained Taxation Commissioner Frits Bolkestein.

“Traders, particularly those operating across borders, suffer as a result of lack of clarity of VAT rules and different interpretations of those rules by different Member States,” he added.

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