Different VAT rates between physical and digital goods and services do not fully reflect today's realities.
Moreover Member States feel unduly constrained in their rates-setting policy.
The time has come to develop a common agenda for tax administrations in order to build trust and to strengthen tax administrations’ capacity to tackle fraud and adapt to economic developments while working together.
The Commission will: It is also important to improve voluntary compliance and cooperation between businesses and tax authorities.
of the new place of supply rules, in line with the general principles, at the place of destination, for telecommunications, broadcasting and electronic services provided to final consumers with a One Stop Shop to facilitate tax compliance;.
Moreover, EU businesses are at a competitive disadvantage, as non-EU suppliers can supply VAT-free goods to consumers in the EU under the exemption for imports of small consignments (nearly 150 million VAT-free consignm the Commission is therefore preparing a comprehensive simplification package for SMEs that will seek to create an environment that is conducive to their growth and favourable to cross-border trade.
Some of these initiatives have already been announced, and they will be completed with other measures to help immediately address the fraud issue.
In addition, it could help building trust and combat fraud.
Piecemeal simplification is also unlikely to upon the agreement of EU legislators that the VAT system should be based on the principle of taxation in the country of destination of the goods.
This means that the taxation rules according to which the supplier of goods collects VAT from his custome Since preparing and adopting such a major change in the way VAT works will take some time, the Commission will in parallel take forward a number of other linked initiatives to help resolve the challenges presented by the VAT system.
It sets out immediate and urgent actions to tackle the VAT gap and adapt the VAT system to the digital economy and the needs of SMEs.
And it provides clear longer-term orientations on the definitive VAT system and VAT rates. Above all, political leadership is needed, to overcome the deep-rooted obstacles that have blocked progress in the past and finally adopt the reforms needed to combat fraud, remove administrative barriers and reduce regulatory costs to simplify life for Europe’s businesses.