EU VAT reform risks burdening business

British businesses could be hit with a 'complex and disproportionate burden' if a package of value added tax reforms is approved by Europe's finance ministers tomorrow.

Proposals before the Economic and Financial Affairs Council could mean that telecommunications companies, satellite broadcasters and digital service providers would face a levy in the country where services are consumed, instead of where the company is based.

The proposal is intended to prevent distortions which have allowed online businesses to flock countries with a lower VAT rate, such as Luxembourg.

KPMG warned that the VAT package will create administrative problems for businesses supplying services to customers across the continent, possibly moving the number of tax filings from one to 27 as they comply with multiple jurisdictions, the FT reported.

KPMG said there is currently no clarity as to how taxpayers ought to apply the rules to identify place of consumption and no provisions to counter the risk of multiple claims from member states.

Further reading:

Reform of VAT risks 'burdening businesses'

ECOFIN VAT reform stalled by Luxembourg until next year at earliest - source