EU Single VAT Area challenge
The small enterprise association, UEAPME, has challenged the admin burden that the European Commission’s 2022 Single VAT Area proposal may impose.
UEAPME, an employers’ association, is concerned that the requirement to track and correctly charge national VAT rates on B2B transactions across 28 states will place a high compliance burden on small companies. It also believes the ‘Certified Taxable Person’ simplification will not be available to millions of small companies due to the cost of application and ongoing compliance.
The Single VAT Area proposal aims to tackle the stubborn €50billion VAT fraud issue in Europe. It switches the B2B goods place of taxation to the country of the customer. This would require cross-border sellers to charge and collect foreign EU VAT. This VAT is then declared through their domestic VAT return, and their home tax authority redistributes it to the appropriate other EU states. This would eliminate the fraud-vulnerable VAT zero-rating system.
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