Despite great potential, success of proposed VAT reform cannot be taken for granted

VAT tax reform

A new VAT system for taxing trade between Member States must realise its full potential and limit any possible negative effects on the single market, says the EESC in its opinion on the Commission's proposal. Greater cooperation between authorities and extensive communication will be key to the successful implementation of the proposal.

The EESC considers the proposed reform to be a crucial step in completing the move to a definitive VAT system for taxing goods in B2B trade based on the destination principle. It believes that the new framework can bring tangible benefits to businesses.

"The reform can have a positive impact on businesses and their growth, but its success cannot be taken for granted", said rapporteur Krister Andersson. "Rules must be properly implemented, and national tax authorities must intensify their day-to-day collaboration while also engaging in a communication campaign," he explained.

While the reform will change the taxation of cross-border B2B trade in goods, services will continue to be taxed under a different regime. As this is likely to cause problems, the EESC calls for an exploration of how a system covering both areas can be rolled out as quickly as possible.

"A common way of taxing goods and services would be more conducive to growth and more effective against fraud" said co-rapporteur Giuseppe Guerini.

In its opinion the EESC sets out practical recommendations on how the reform can be implemented and asks the Commission to clarify the proposed provisions for the One-Stop Shop (OSS) and the certified taxable person. It expresses concerns about the creation of new obstacles for SMEs and startups. Finally, the EESC recommends adequate investment in IT hardware and software assets to properly develop a solid and reliable OSS. (jk)