The European Commission today proposed the detailed technical amendments to EU rules on value added tax (VAT) that would supplement a recent proposal to revise the VAT system to make it more “fraud-resilient.”
According to today’s EC release, the measures would substantially modify the VAT rules and create a single EU VAT area. Under the current VAT system, trade in goods between businesses is viewed as two transactions: (1) a VAT-exempt sale in the EU Member State of origin; and (2) a taxed acquisition in the EU Member State of destination. Today's proposal would end this treatment, and would define the cross-border trade of goods as a single taxable supply so that goods are taxed in the EU Member State where the transport of the goods ends.
The amendments would allow for a “one stop shop” for all business-to-business EU traders with respect to VAT (as announced in October 2017 reform proposals). This system would also be available to companies outside the EU that want to sell to other businesses within the EU and that would otherwise be required to register for VAT in every EU Member State. These businesses would simply have to appoint one intermediary in the EU to take care of VAT for them.
Today’s announcement clarifies that it is the seller that would charge the VAT on a sale of goods to a customer in another EU country, at the rate of the EU Member State of destination. Only when the customer is a “certified taxable person” (i.e., a reliable taxpayer, recognized as such by the tax administration) would the acquirer of the goods be liable for VAT.
Read a June 2018 report prepared by the KPMG member firm in the UK
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.