European Parliament backs EU VAT reform
- Oct 31, 2011 | Richard Asquith

Following the publication of the European Commission’s Green Paper on the EU VAT reform, the European Parliament has issued its views on the proposal. Its analysis of the Green Paper included the following points:
Update of EU VAT System
The Parliament backs the EC’s reform agenda, in particular the attempts to reduce the VAT administrative compliance burden and associated costs.
Closing VAT Fraud loopholes
Over the past 10 years, the Parliament has identified the increasing levels of VAT fraud as a major cause of lost revenues – it puts the amount as Euro 100 billion. A key component to eliminating fraud – in particular ‘Carousel Fraud’ would be the change of the rules on the Place of Supply
Simplification of reduced VAT rates
Most EU member states have been operating arbitrary rules on the reduced VAT rates, which runs contrary to the original objectives of the EU VAT Directive – which provided for limited exemptions from applying the full standard VAT rate across all goods and services.
Cross Border VAT Compliance burden disincentive to single market objectives
The administrative burden placed on non-resident traders, doing business across European borders. Many traders instead turned to export markets outside of Europe as the administrative barriers appeared lower.

