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proposal for standard VAT

On 23 October 2013 the European Commission announced a proposal for a standard value added tax (VAT) return, aiming to reduce administration for businesses, ease tax compliance, and make tax administration across the EU more efficient.

Available data reported by companies in the EU has identified the administration of VAT returns as a problem which requires enterprises to “battle with a complex medley of information requirements, procedures and deadlines”.  According to the EU Commission, having one identical VAT return form will not only ease the burden on the national fiscal authorities but it will also reduces the loopholes that can be used for tax evasion purposes. The standardisation of VAT returns in the EU was included as part of the Commission’s “Refit” programme, a new set of measures aimed at making EU law simpler in order to create a more business-friendly environment across the union.

The unified rules are intended to start in 2017, provided the proposal is adopted by Member States.  Once in effect, the VAT return submission will be identical in all EU countries and the standard VAT return will replace domestic VAT returns.

According to the proposal, all businesses around the EU will be asked for the same basic information and they will have to comply within the same deadlines. The proposed VAT return will only have five compulsory boxes to be completed: chargeable VAT, deductible VAT, net VAT amount (payable or receivable), total value of input transactions and total value of output transactions. EU Member States will be allowed to request a number of additional standardized elements, up to a maximum of 26 information boxes. Businesses will file the standard VAT return on a monthly basis, while “micro-enterprises” will only be required to file on a quarterly basis. The standard VAT return also encourages electronic filing.

Read the EC proposal for a standard VAT return.

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