Belgium set to meet UK to solve VAT crisis
A bilateral meeting between the Belgian presidency of the European Union and British officials is under consideration as a way of solving the growing crisis over VAT on electronic goods.
Currently suppliers of downloadable electronic goods from outside the EU pay no VAT on their sales while domestic traders must comply with tax law.
EU officals had thought they had found a solution but in June Britain blocked the move by suggesting there should be an EU wide moratorium for VAT on electronic goods.
A decision was put off for the Belgian presidency to find a solution, but the new incumbents have set no time aside over their six month tenure to put the matter to rest.
Sources within the EU say ‘a viable’ solution had been found and that it was only the UK that objected.
The developments come as European finance ministers met in Brussels where the UK is expected to blocks plans to finance the EU with a direct tax.
Tax experts are now concerned that the VAT issue is being overlooked, despite talk of a bilateral meeting.
Chas Roy-Chowdhury, head of tax at ACCA, said: ‘While this discussion is going on business within the EU is losing out.
‘The EU does not believe there is support among businesses for a moratorium but there clearly is.’
Britain moved on a moratorium after a proposal from Sweden gained ground at the EU. The idea was that a third party trader, like those from the US, would register for VAT in just one EU country and then charge, and declare, tax at the rate of the countries in which customers live. The host country would then collect and redistriute the revenue.
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EU delays decision on VAT moratorium