On 23rd October, 2013 the European Commission proposed that all of the 28 countries in the European Union introduce a standard EU VAT Return from 1st January, 2017.
The overwhelming case for a standard EU VAT Return is that it should simplify the administration of VAT for businesses operating in more than one EU country. The existing situation where each country has designed its own VAT Return in its local language makes it extremely difficult for a business to perform the necessary VAT administration in each of the countries in which it operates.
The significance of this administrative burden is that it clearly acts as a barrier to trade. It does not surprise me that only 13% of all VAT taxpayers in the EU submit VAT returns in more than one member state. If we have a truly standard VAT return throughout the EU then a UK company could refer to a version in English and use it as the model when considering completing the same VAT return in the language of another EU country in which it is registered or should be registered.
I asked Professor Rita de la Feria, who is the Chair in Tax Law at Durham Law School and Programme Director at the Oxford University Centre for Business Taxation, about the likelihood of the Commission’s proposals being accepted by the member states and she commented:
"I believe that it is most likely that the Commission's proposals will succeed. If they do not gather unanimous support, they might be approved under the "enhanced cooperation" procedure. I don't believe opposition will come from member states with high compliance levels, like Germany and the UK, but from countries that at present have been adopting a stronger stance on compliance. In any event, even if approved only under enhanced cooperation and not applied to all member states, in my opinion this is a very significant and positive step towards facilitating and enhancing intra-EU trade, particularly for SMEs."
I hope that this simplification will actively encourage businesses in all EU countries to register for VAT in many EU countries leading to a much needed expansion of cross-border trade within the single market. As a provider of VAT training we have seminars that we could present throughout the EU. The need to complete non-standard VAT returns in each country’s local language ironically presents us with a problem that restricts us from delivering seminars in other EU countries.
I eagerly await the introduction of a standard EU VAT return.
By Stephen Smith
Managing Director of UK Training (Worldwide) Ltd