The European Commission wants the new regulations to offer equal opportunities to traditional companies and digital platforms
European countries lost about €23 billion in revenue due to VAT fraud in 2020. With the European Union (EU) economy under pressure from the consequences of the war in Ukraine, Brussels wants to strengthen its community rules to reduce this type of fraud while preparing for the digital transition. In line with this, the European Commission presented a proposal on Thursday to modernize its VAT regulations and offer equal opportunities to traditional and digital companies.
It’s a sensitive matter. “The EU loses billions every year to VAT fraud, while businesses struggle to comply with outdated laws. Today’s proposal heralds a new era for European VAT, benefiting legitimate businesses and Member States, at a time when public finances are under great pressure,” said Economy Commissioner Paolo Gentiloni. The system proposed by Brussels includes information “in real time” via electronic invoicing. This will provide states with more information to combat fraud and is estimated to help reduce fraud by €11,000 million per year. This standard will also provide a basis for countries to implement their own national information systems to feed.
The initiative also makes carriers and accommodation platforms – such as Uber, Cabify and Booking – responsible for the collection and payment of VAT to the tax authorities. This rule is expected to “ensure a uniform approach” across the EU and “contribute to a more level playing field between traditional and online short-term transport and accommodation services”.
The European Commission strives for a European umbrella, by means of a European VAT register. In this way – and as elaborated in the European proposal – companies that sell their products to consumers in another Member State only have to register once for VAT purposes and fulfill their obligations in “one online portal”. According to Brussels estimates, this measure will mainly benefit SMEs and save some €8,700 million in administrative and registration costs over the next ten years.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
