Council Directive (EU) 2018/1910 of 4 December 2018

What it is

The Committee on Economic and Monetary Affairs adopted, following the consultation procedure, a report by Jeppe KOFOD (S&D, DK) on the proposal for a Council directive amending Directive 2006/112/EC as regards harmonising and simplifying certain rules in the value added tax system and introducing the definitive system for the taxation of trade between Member States. As a reminder, the proposal to amend the VAT Directive is a step forward to replacing the transitional arrangements by a definitive VAT system for intra-Union B2B trade under which domestic and cross-border transactions of goods will be treated in the same way. The proposal sets out a set of fundamental principles or ‘cornerstones’ for the future definitive VAT system, and four ‘quick fixes’ to improve the day-to-day functioning of the current VAT system, tackling the VAT identification number, chain transactions, call-off stock situations and proof of intra-Community supply. The committee responsible recommended that the European Parliament approve the Commission's proposal subject to the following amendments. The European Parliament adopted by 536 votes to 19, with 110 abstentions, under a special legislative procedure (consultation), a legislative resolution on the proposal for a Council directive amending Directive 2006/112/EC as regards harmonising and simplifying certain rules in the value added tax system and introducing the definitive system for the taxation of trade between Member States. The European Parliament approved the Commission proposal subject to the following amendments. Reforming the VAT system : Members stressed that the VAT gap, i.e. the difference between the amount of VAT revenue actually collected and the theoretical amount that is expected to be collected, has been increasing, reaching EUR 151.5 billion in 2015 in the EU-28. They stressed the need for an urgent and comprehensive reform of the VAT system towards a definitive VAT regime, to facilitate and simplify cross-border intra-Union trade and make the system more fraud-proof. Certified taxable person : Parliament specified that strict criteria, applied in a harmonised way by all Member States, need to be put in place to determine which enterprises can benefit from the status of the certified taxable person, and common rules and provisions resulting in fines and penalties for those who do not comply with them should be established. The Commission shall present simplified administrative procedures for SMEs to obtain the status of certified taxable person. Information on whether an economic operator is a certified taxable person should be accessible via the VIES system. VAT dispute resolution mechanism : Parliament proposed that this shall be set up by 1 June 2020 to resolve disputes between Member States of claimed or filed or suspected erroneous cross-border VAT payments. The mechanism shall be composed of Member States’ competent authorities and shall be applied where the Mutual Agreement Procedure does not lead to a result within two years. One-stop shop : stressing that the one-stop shop for businesses was at the core of the new destination-based system, Members suggested that proposals to improve…

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