EU ministers agree to VAT fixes, new rules for electronic publications

EU finance ministers at their meeting today in Luxembourg agreed to fix several practical problems with the EU VAT rules to improve the functioning of the system pending the adoption of comprehensive VAT reform.

The Economic and Financial Affairs Council (Ecofin) also agreed to allow member states to align the VAT rates for electronic and physical publications and reached agreement on new anti-fraud measures.

Quick fixes

The Council agreed to the following four short-term ‘quick fixes’ to improve the functioning of the EU VAT system, proposed by the EU Commission last October:

•  A simplified and uniform treatment for call-off stock arrangements, where a vendor transfers stock to a warehouse at the disposal of a known acquirer in another member state;
• A proposal requiring the identification number of the customer to be additional condition to benefit from the VAT exemption for intra-EU supply of goods;
• A proposal establishing uniform criteria for determining the VAT treatment of chain transactions;
• A common framework for the documentary evidence required to claim a VAT exemption for intra-EU supplies.

The provisions would apply from January 1, 2020.

The Council is expected to adopt the directive once the European Parliament has given its opinion.

VAT rates for e-publications

The Council also agreed that member states could align the VAT rates they set for e‑publications with the regime currently in force for print publications such as books, newspapers, and periodicals.

Thus, states may apply reduced, super-reduced, or zero VAT rates to electronic publications.

The directive will be adopted without further discussion once the text has been finalized in all official languages.

Exchange of information on VAT fraud

The Council also adopted rules strengthening the exchange of information between national tax authorities on criminal VAT fraud matters.

“This reform is instrumental in our fight against tax fraud. It will improve the exchange of information between national administrations, as well as the quality and comparability of data,” commented Hartwig Löger, minister for finance of Austria, which currently holds the Council presidency.