Lawrence Grant, Chartered Accountants were recently successful in recovering GBP 50k in input VAT that was deducted by French VAT authorities, after the VAT was held by the French VAT authorities for almost one year.
When an EU taxable person makes a supply of goods or services to a customer in another EU member state, he normally asks his customer to provide a VAT number in order to dispense with charging the local VAT. One may wonder whether this is a legal obligation. This is especially interesting if the customer is clearly a taxable person according to the doctrine of the supplier's country, but is nevertheless unable to provide a VAT number.
Member states of the European Union suddenly affected by large-scale VAT fraud expect to be in a position to take action against missing trader intra-community fraud within a month with the so-called reverse-charge provision. If this regulation were used as an emergency measure, VAT would no longer be due from the supplier but payable by the buyer. This fast response mechanism is intended to become part of the new VAT strategy as proposed by the EU Commission on 31 May 2012.
By Sonal Shah, Lawrence Grant Chartered Accountants
UK businesses are selling an increasing proportion of their goods and services online. Cross-border trade has also increased as customers have been able to identify suppliers, anywhere in the world, offering a greater choice of merchandise and competitive prices. The ease of setting up businesses online and the greater choice for retail businesses in where they locate, with no need to have a physical presence on the high street, could make it more difficult to trace suppliers and collect VAT.
"The complexity of the current EU VAT system is an obstacle to doing business the single market. The One Stop Shop will greatly facilitate cross border expansion of European start-ups. This turn will help to generate growth and jobs." – Algirdas Semeta, Commissioner for Taxation, Customs, Anti-Fraud and Audit said on the press release regarding developing the One Stop Shop for Cross border VAT compliance.
The EU Commission considers the reduced VAT rate of seven percent on objects of art and collectors' items, which currently applies in Germany, to be in breach of European Law. However, cross-party resistance is stirring against the increase in the VAT rate of 19 percent, which is standard in Germany. In this regard, Germany has already lost a similar case before the European Court of Justice.
EU residents receiving goods from Germany will have to get used to confirming the delivery an extra time on a new form for the German minister of finance. Without this so-called confirmation of delivery for exports to the EU, VAT for the goods will remain payable in Germany for the supplier in the future.