Value added tax (VAT) is a major source of tax revenue in the European Union and raised around € 1 trillion in 2015 (7% of EU GDP). Despite many reforms, the VAT system has been unable to keep pace with the challenges of today’s global, digital and mobile economy. This leads to a loss of € 150 billion of VAT revenue every year as well as high administrative burdens and compliance costs, especially for SMEs and micro-businesses.

“Fragmentation and complexity of the VAT system result in major compliance costs for businesses especially when working across borders. As many of these costs are fixed, rather than proportional to their turnover, small businesses bear proportionally an even higher burden. The European Commission’s proposal is expected to reduce those costs by up to 18% per year. Additional support via an electronic portal to allow all businesses to keep track of different VAT systems and extending the scope for the Mini One Stop Shop would help to reduce the burden even further. Also, moving to a destination based tax system will reduce the risk of unfair competition and simplify cross boarder trading”, said Paul Lindquist (SE/EPP), Commissioner of Stockholm County Council and rapporteur on the CoR opinion “Fair taxation package”, during the adoption of the opinion at the ECON meeting.

Adoption timetable:

  • 1st discussion and adoption in ECON on 21 June 2018
  • Final adoption in Plenary session of October 2018

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