Straßburg - Due to rampant tax fraud, the EU Commission is proposing a fundamental reform of the value-added tax system in Europe.
In the future, therefore, VAT should also be levied for cross-border trade between companies in different EU countries, as the Brussels authorities reported on Wednesday. These transactions are currently exempt from tax.
According to the EU Commission, the EU states loose more than € 150 billion annually through tax avoidance, fraud and insolvency. As a result of cross-border value-added tax, about 50 billion euros a year evade payment into public funds.
In the case of value-added tax, firms purchase goods in another country without VAT being charged. If the goods are then sold on, the fraudsters charge VAT on the price. Instead of paying the amount to the authorities, they collect the money. Partly, fraudulent companies are used for this type.
According to the proposal, the tax authorities of the country of origin will now charge the value added tax, while calculating the value added tax of the destination country. The collected sum is then to be passed on to the authorities of the country in which the goods are ultimately used or consumed.
"25 years after the creation of the internal market, businesses and citizens wishing to pursue cross-border business are still facing 28 different VAT systems," said Commissioner Pierre Moscovici. The system based on national borders will be abolished. From the year 2022, countries should treat cross-border sales such as domestic sales.
The levying of individual taxes or the setting of tax rates is in the EU competence of the national states. However, Brussels can make proposals for the framework conditions. In order for the proposals to become law, the EU states should unanimously agree.
Comment: The European Union stands to gain from its own proposal.
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