1 European Commission Taxation and Customs Union European Commission Taxation and Customs Union Administrative Burden Reduction Taxation Issues High Level Group on Administrative Burdens, 30 January 2014

2 European Commission Taxation and Customs Union Towards a simpler VAT System COM(2011)851 on the future of VAT:  A simpler, more transparent VAT system  reduce administrative burden  encourage increase of cross border trade  Measures achieved:  Electronic refund procedure: Council Directive 2008/9/EC  Electronic invoicing: Council Directive 2010/45/EU  Mini One Stop Shop (MOSS): Council Directive 2008/8/EC

3 European Commission Taxation and Customs Union Electronic invoicing First Directive on VAT Invoicing: Council Directive 2001/115/EC ─ Applicable as of 1 January 2004 ─ Different rules on e-invoicing in the MS (prior notification, requirement of e-signatures or EDI as approved methods, etc.) ─ Business reluctance to use e-invoicing given discrepancies and inter-operability issues ─ High Level Group on Administrative Burdens recommended in 2008 that paper invoices and e-invoices should be treated equally  COM adopted in 2009 a proposal for the second invoicing Directive

4 European Commission Taxation and Customs Union Electronic invoicing Second Directive on VAT Invoicing: Council Directive 2010/45/EU −Applicable as of 1 January 2013 −Electronic invoicing on an equal footing with paper invoices −Estimated savings €18 billion −COM issues Explanatory Notes for a clear understanding of the new VAT invoicing rules: ( ation/vat/traders/invoicing_rules/explanatory_notes_en.pdf ) ation/vat/traders/invoicing_rules/explanatory_notes_en.pdf

5 European Commission Taxation and Customs Union Electronic invoicing: Council Directive 2010/45/EU Implementation state of play −Implemented by all Member States −COM issued a reasoned opinion to Cyprus to transpose the legislation on 20 November 2013 −Cyprus published relevant legislation on −No major problems of implementation reported by Member States Follow-up implementation −No ex-post evaluation undertaken yet by Member States, apart from BE (ex-post: €172.1million) −Generally well received by Member States and businesses −Increased use of e-invoicing is expected, including for SMEs −Some Member States consider providing open-source software for e-invoicing −COM will make a formal assessment of the e-invoicing rules by 31/12/2016, focusing on the decrease in administrative burdens for businesses

6 European Commission Taxation and Customs Union Electronic refund procedure: Council Directive 2008/9/EC Applicable as of 1 January 2010 Estimated savings: €447million Main features: −Fully electronic procedure  quicker refund to applicants −Use of standardised codes for types of expenses/business activities (Commission Regulation (EC) No 1174/2009) −Taxable persons will be paid interest if Member States are late making refunds −Replaces the previous paper-based procedure (slow, cumbersome, and costly)

7 European Commission Taxation and Customs Union Electronic refund procedure: Council Directive 2008/9/EC Implementation state of play −Implemented by all Member States −Technical problems of implementation reported by Member States in the first half year of 2010 COM and Member States formed a project group to assess the problems Agreement on new national IT procedures /guidelines to MSs to solve the problem COM prepared a Vademecum & an Information Document to facilitate the application of the Directive: ( nds/index_en.htm) nds/index_en.htm

8 European Commission Taxation and Customs Union Electronic refund procedure: Council Directive 2008/9/EC Implementation - Current issues reported by Member States: −Inconsistencies/interoperability issues in Member States' IT systems (choice of different parameters)  additional IT adjustments and increased costs −Insufficient training of business users to file correctly the application −Some Member State do not send a notification message regarding the reimbursement to traders −Delays in reimbursement by certain Member States COM response −Project group to analyse inconsistencies −Implementation of improvements by 1 July 2013 −Infringements ongoing or under examination.

9 European Commission Taxation and Customs Union Electronic refund procedure: Council Directive 2008/9/EC Follow-up implementation −No ex-post evaluation undertaken yet by Member States −System improved from its 2010 launching: easier, less costly −Presumed effective due to: −increased number of applications each year −reduced period of reimbursement −Member States responses: −Tangible savings: reduction of staff dealing/hours spent with this task, reduction of postal fees. −Costs associated: IT costs for the web-portal and its adjustments −COM to launch soon a general compliance cost study (2014), to assess over time the impact of changes of EU legislation

10 European Commission Taxation and Customs Union On-going Initiatives MOSS −New rules applicable from 1 January 2015 −3 implementing regulations adopted −COM published in October 2013 a Guide to the VAT mini One Stop Shop −Another set of guidelines on place of suply rules to be published soon −Estimated savings on administrative burden: € 463 million VAT Standard Return −COM proposal published in October 2013; −Estimated savings on administrative burden: €15 billion/year −Under discussion in Council

11 European Commission Taxation and Customs Union Future initiatives Extension of the one-stop-shop to distance sales of goods −Study planned for this year −Proposal in 2014/2016 (TBC) Definitive regime of VAT −Study ongoing on different options −Discussions with Member States and business

12 European Commission Taxation and Customs Union Thank you for your attention!