TaxCorporate TaxEU VAT reform risks burdening business

EU VAT reform risks burdening business

Businesses could end up filing tax returns to 27 different tax authorities

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

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