TaxPersonal TaxUK pushes EU to suspend online VAT

UK pushes EU to suspend online VAT

The UK is lobbying Brussels to abandon VAT on all electronic downloadable goods sold via the internet in the European Union.

Accountancy Age

has learned the move, which could cost European exchequers millions of pounds in lost revenues, is part of an effort to head off another proposal seen by Whitehall as more damaging. Customs & Excise believes the alternative, known as the Swedish compromise, would be impossibly bureaucratic.

The proposal is sure to prove controversial as it comes in the middle of an election campaign in which tax cuts have become the key battleground. On Tuesday shadow chancellor Michael Portillo launched a poster comparing Labour’s high tax agenda with Tory tax cuts.

UK officials are attempting to persuade the European Commission that scrapping VAT is the only short-term way of dealing with companies in third-party countries, like the US, that supply electronic goods to EU citizens without paying sales tax.

The UK move is also likely to upset Commission plans to deal with the problem. EC officials at a meeting in Brussels last week treated the UK idea with disdain but there is a growing feeling that a moratorium is the only solution. The commission is desperate to solve the problem of VAT on electronic goods but currently favours the Swedish compromise.

This would have third-party traders register in one EU state but levy VAT at the rate of the country in which each customer lives. The registration country would collect and redistribute VAT.

The UK is understood to have proposed the moratorium at a meeting just days after a VAT conference attended by senior Customs official Martin Brown and the Commission?s VAT expert Arthur Kerrigan.

Backing the moratorium, Chas Roy-Chowdhury, head of taxation at ACCA, criticised the Swedish compromise saying it would create ‘horrendous burdens’.

Links

Web VAT continues to baffle Brussels

Lib Dem pledge wins ICAEW praise

Related Articles

HMRC appeal rejected in Tottenham Hotspur case

Administration HMRC appeal rejected in Tottenham Hotspur case

2w Emma Smith, Managing Editor
HMRC urged to clarify impact of income allowances on Self-Assessments

Personal Tax HMRC urged to clarify impact of income allowances on Self-Assessments

2m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

2m Emma Rawson, ATT Technical Officer
Wealthy individuals could circumvent top tax rate rises

Personal Tax Wealthy individuals could circumvent top tax rate rises

4m Alia Shoaib, Reporter
Italy grants first successful non-dom status application to former UK non-dom

Personal Tax Italy grants first successful non-dom status application to former UK non-dom

4m Emma Smith, Managing Editor
Industry reaction: Taylor Review does not go far enough in addressing tax issues

Legal Industry reaction: Taylor Review does not go far enough in addressing tax issues

5m Alia Shoaib, Reporter
Does the Taylor Review sufficiently address the gig economy?

Corporate Tax Does the Taylor Review sufficiently address the gig economy?

5m Alia Shoaib, Reporter
HMRC tax evasion assistance requests double in five years

Corporate Tax HMRC tax evasion assistance requests double in five years

5m Emma Smith, Managing Editor