Dods EU Alert: VAT rules

Commissioner Šemeta responds to a written question by former MEP Juozas Imbrasas (EFD, LT)

By Dods EU monitoring

03 Jun 2014

Question for written answer E-005082/2014 to the Commission Rule 117 Juozas Imbrasas (EFD)

Subject: VAT rules

Since 2008, Europe has been experiencing the impact of the most severe economic crisis in 50 years: for the first time Europe has over 25m unemployed; small and medium-sized enterprises (SMEs) in the majority of Member States have not yet been able to return to pre-crisis levels.

Under the current economic crisis conditions, new or newly established enterprises are very important in restoring jobs in Europe. Problems related to a small number of enterprises emerging, their frequent rotation of activities and their slow growth in Europe are well known. It is the right time to take action to ensure that European entrepreneurs and Europe as a whole adapt better, are creative and have a greater impact on competition on a global scale, which is larger and faster than ever before.

Successful examples from across Europe show that there are best practices that can help businesses to flourish and grow. To remove obstacles and eliminate unnecessary red tape that hinders business activities, Europe needs to make full use of the aforementioned rich experiences. The recognition of entrepreneurs as job and wealth creators should be achieved in the administrations of all Member States. In addition, Europe has to become a favourable place for cutting-edge entrepreneurship development at an international level: regulatory and support systems should attract business founders from other regions of the world to come to Europe, and not, for example, to the United States or East Asia. Only the following approach can help to achieve large-scale progress in the key areas: simpler and more proportionate regulatory requirements, access to finance, support for new businesses, transfer of business and effective bankruptcy procedures and a fair possibility for failed honest entrepreneurs of starting a business from scratch.

The complex (new) VAT rules have long been among the biggest obstacles for businesses to make use of the single market potential. When can proposals for harmonisation of the rules and reduction of costs for compliance with the VAT rules by submitting one tax return be expected?

Answer given by Mr Šemeta on behalf of the Commission

The Commission adopted a proposal on a Standard VAT return aimed at simplifying the declaration obligations imposed on taxable persons on 23 October 2013.

The administrative burden reduction potential for this initiative has been estimated at up to EUR 15 billion per year. This will benefit small businesses in particular. According to this proposal, a new EU standard VAT return would replace all national VAT returns which currently consist from 6 to almost 600 boxes.

The standard VAT return would be made of only 5 standardized compulsory boxes and 21 additional standardized boxes optional for Member States. VAT returns would cover one calendar month, with micro enterprises allowed quarterly returns.

On 26 February 2014, the European Parliament adopted its report on the proposal with almost unanimity. This report fully supports the Commission's proposal.

Discussions in Council started in December 2013 and will be continued by the Italian Presidency.

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