More flexibility in the VAT rates of individual countries, within a new reference "cage" that harmonises the tax at EU level. This is the proposal launched by the European Commissioner for the Economy Pierre Moscovici, aimed precisely at standardizing a tax on which the States build a large part of tax revenues and that is of social policies, and at favoring homogeneous rules of competition between companies, especially small ones.
It is precisely the smallest companies (representing 98% of the total companies in Europe) and active on several international markets that pay the highest competitiveness gap, due to the administrative management costs of VAT: it is calculated 11% more than companies that act only on the national market. The (basically) unified tax in the EU area will allow, according to Brussels technicians, an 18% savings in corporate compliance costs.
THE MOSCOVICI PROPOSAL
Moscovici's proposal is one standard VAT rate for everyone, which is not less than 15%, to which each country may add:
– a reduced rate (with a rate that can go down to 5% starting from the normal value chosen by the country) for two distinct categories of products;
– an area of total exemption from VAT;
– a further reduced rate, for one category only, between 0 and 5%.
The weighted average of all these rates must be, according to the calculations of the EU Commission and precisely with the intention of giving uniformity, of at least 12% for all member countries. Furthermore, for a series of strictly listed products, VAT can never fall below the minimum 15% set by Brussels: these are the weapons, alcohol, tobacco and gambling.
The goal, according to what is written in the press release published on the site of the Commission, is threefold: as mentioned, to help small businesses that carry out activities even outside national borders; grant room for manoeuvre, albeit within a defined framework, to countries that need to do so according to their needs or strategies; and last but not least fight against tax evasion. Only that relating to VAT, in the various Member States, is worth 50 billion euros a year.
E-COMMERCE
The debate on the VAT number is also played out on the online terrain. In fact, the VAT reform on e-commerce will be fully implemented between next year and 2021, with the simplification of the tax to be applied (it will almost always be that of the country of destination of the good/service). Pending the simplification of obligations, however, it must be able to count on the enhanced administrative cooperation of the 27 for fraud hunting.
Who knows how things will change, it already seems that the road to reduce bureaucracy and to undertake digitization is slow and that companies have only recently been organizing themselves to use management software for invoicing, let's hope that we can put some order and streamline all the useless paperwork 🙂