EU countries lost €137 billion in Value-Added Tax (VAT) revenues in 2017 according to a study released by the European Commission today. The so-called ‘VAT Gap’ – or the overall difference between the expected VAT revenue and the amount actually collected – has reduced somewhat compared to previous years but remains very high. This substantial VAT Gap again highlights the need for comprehensive reform of the EU VAT rules, as proposed in 2017 by the Commission, and increased cooperation between Member States to clamp down on VAT fraud and to make the rules work for legitimate businesses and traders. The VAT Gap measures the effectiveness of VAT enforcement and compliance measures in each Member State, as it provides an estimate of revenue loss due to fraud and evasion, tax avoidance, bankruptcies, financial insolvencies as well as miscalculations.
A summary of the exchange of views is now available.
A pilot project has been set up to allow taxable persons to obtain advance rulings on the VAT treatment of complex cross-border transactions. Several Member States are participating in this project, set up by the EU VAT Forum. Taxable persons envisaging cross-border transactions between two or more of the participating Member States can request for such a ruling with regard to the VAT treatment of the transactions they foresee.
ECA examined whether the European Commission has established a sound regulatory and control framework for e-commerce with regard to the collection of VAT and customs duties, and whether Member States’ control measures help ensure the complete collection of VAT and customs duties on e-commerce. The report found that despite recent positive developments the EU is not currently dealing adequately with these issues but have addressed some of the weaknesses identified with the “e-commerce package”.
ECA makes a number of recommendations as to how the European Commission and the Member States should better address the challenges identified and establish a sound regulatory and control framework.
Following an amendment to the Union Customs Code Delegated Regulation (EU) 2015/2446, it will be possible from 1 January 2021 to declare goods up to 150 € using a customs declaration that requires 3 times less data than a standard declaration.
On Tuesday 16 July 2019, the European Court of Auditors (ECA) will publish a special report on the EU action to tackle VAT fraud and collect customs duties on e-commerce.