Action plan on VAT: Towards a Single VAT Area?

Transcription

1

2 Welcome to the EFS-seminar on Action plan on VAT: Towards a Single VAT Area? Conference Chairman: Walter de Wit Rotterdam February 22, 2018

3 Agenda Opening Walter de Wit Moving towards a single EU VAT area? Quick fixes and the European Commission s proposals Gert-Jan van Norden Authorized Economic Operator Experiences and lessons for VAT Marcel Neggers Break Removing VAT obstacles to e-commerce in the single market Marie Lamensch Reflections on the VAT Action Plan from a business perspective Allard van Nes Panel discussion Speakers and Ben Terra Drinks and networking

4 Moving towards a single EU VAT area? The European Commission s proposals, including quick fixes Prof. dr. Gert-Jan van Norden Tilburg University Meijburg & Co Rotterdam 22 February 2018

5 EU VAT system - fit for the future?

6 The case for a single EU VAT area VAT needs to be modernised and rebooted Business as usual is not an option It is time for the creation of a genuine single EU VAT area for the single market

7 VAT Action Plan 2016

8 Follow up on VAT Action Plan October 2017 Proposal Directive definitive VAT system COM(2017)569 Proposal Implementing Regulation certain exemptions for Intra-Community transactions, COM(2017)568 Proposal Council Regulation amending Regulation 94/2010 re CTP, COM(2017) November 2017 Proposal Council Regulation amending Regulation 94/2010 to strengthen administrative cooperation, COM(2017)706 5 December 2017 Directive 2017/2455 re supplies of services & distance sales Regulation 2017/2454 re administrative cooperation and combating fraud Regulation 2017 amending Implementing Regulation 282/ January 2018 Proposal re VAT rates, COM(2018)20 Proposal re SME regimes, COM(2018)21

9 Definitive VAT regime

10 Current regime B2B supplies of goods MS A MS B A B Intra-Community supply - 0% in MS A Intra-Community acquisition in MS B

11 2022 Radical change B2B supplies of goods MS A MS B A B Supply of goods by A Place of supply: MS B No taxable event

12 2022 B2B supplies of goods (1) New place of supply & OSS MS A MS B A B Supply of goods by A Place of supply: MS B No taxable event

13 2022 B2B supplies of goods (2) Certified Taxable Person MS A MS B A B Supply of goods by A Place of supply: MS B Certified Taxable Person (CTP) Reverse charge to B

14 Definitive Definitive VAT regime OSS only à abolishment of CTP Also OSS for cross-border services à abolishment of reverse charge

15 2022 Change B2B supplies of goods Impact on business Impact analysis Planning and readiness Managing changed VAT compliance Changes ERP systems Managing One-Stop-Shop Obtaining CTP status Evidence transport goods to other MS Managing CTP status customers

16 Certified Tax Payer (CTP)

17 Certified Tax Payer (CTP) Who is he?

18 Certified Tax Payer (CTP) Obtaining CTP status application at level of national tax authorities proof of compliance with a set of sufficiently harmonized and standardized pre-defined criteria, including: absence of infringements of tax/customs/criminal law high level of control of operations and flow of goods evidence of financial solvency Established in EU Mutual recognition MS Right of appeal

19 Certified Tax Payer (CTP)

20 2019 Quick fixes

21 2019 Quick fixes Call-off stock simplification Simplification for chain transactions Harmonized rules for proof of transport

22 2019 Quick fixes Call-off stock simplification MS A MS B A B IC supply of goods by A Place of supply: MS A IC acquisition by B Place of acquisition: MS B Intra-Community supply of goods (and Intra-Community acquisition) at the moment of removal from warehouse in MS B Instead of transfer of own stock and local supply Only between CTP s (both A and B!)

23 2019 Quick fixes Call-off stock simplification Harmonization betweenms Certain administrative conditions What about simplifications not covered under this quick fix (e.g. NL consignment stock rules)?

24 2019 Quick fixes Simplification for chain transactions MS A MS C A MS A B MS B MS C C MS C Intra-Community supply - 0% in MS A, but by whom? physical flow of goods Intra-Community acquisition in MS C, but by whom? Current framework: ECJ EuroTyre & Toridas Simplification in case B arranges the transport Only between CTP s (both A and B!)

25 2019 Quick fixes Simplification for chain transactions A-B transaction = intra-community transaction B arranges the transport A and B are both CTP B tells A to which MS the goods are transported B is not registered in MS A or MS C

26 2019 Quick fixes Harmonized rules for proof of transport MS A MS B A B Intra-Community supply - 0% in MS A Intra-Community acquisition in MS B Simplification: presumption of transport outside the MS 2 options, both requiring 2 items of non-contradictory evidence Tax authorities may rebut presumption in case of indications of misuse or abuse by vendor or acquirer

27 2019 Quick fixes Harmonized rules for proof of transport Proposal Implementing Regulation, COM(2017) Vendor = transport (or on his behalf) + CTP + 2 items of non-contradictory evidence 2. Acquirer = CTP & vendor has a written statement of transport by acquirer (or on his behalf) + 2 items of non-contradictory evidence

28 2019 Quick fixes Harmonized rules for proof of transport Accepted items of evidence: a. Document signed by acquirer acknowledging receipt of goods in MS destination b. Documents relating to transport (e.g. CMR / bill of lading / invoice transporter / insurance policy transport) c. Official documents (e.g. notary) confirming arrival of goods d. Receipt confirming storage of goods in MS of destination e. Certificate professional body (e.g. Chamber of Commerce) confirming destination of goods f. Contract or PO vendor - acquirer indicating destination of goods g. Correspondence between parties indicating destination of goods h. VAT return acquirer declaring Intra-Community acquisition

29 2019 Quick fixes Valid VAT ID number of acquirer required MS A MS B A B Intra-Community supply - 0% in MS A Intra-Community acquisition in MS B

30 2019 Quick fixes Valid VAT ID number of acquirer required Valid VAT ID number of acquirer required for application of exemption to intra-community supplies of goods Correct & valid VAT ID number also to be included in listing à risk of VAT assessments

31 Let s continue the debate!

32 Authorized Economic Operator Programme Marcel Neggers LL.M. AEO programme manager NL Customs National Customs Office Rotterdam Rotterdam 22 February 2018

33 Content AEO keys facts / general information AEO criteria / benefits AEO application procedure AEO monitoring Link AEO with Certified Taxable Person (CTP)

34 AEO programme key facts New York : attacks on WTC US Customs C-TPAT programme World Customs Organisation (WCO) SAFE Framework of standards to secure and facilitate global trade (International Certification Systems) European Union: AEO programme based on EU legislation (Union Customs Code) operational since 1 January 2008 (2018: about AEO)

35 EU AEO Programme key facts Open to all international logistic supply chain actors Recognised in all 28 EU Member States Unlimited validity, but robust monitoring Two different types of AEO authorisations: ü ü AEO for Customs Simplifications (AEOC) AEO for Security and Safety (AEOS) requiring the fulfilment of specific criteria and offering different benefits.

36 AEO Programme - AEO Criteria - 1. Compliance with customs requirements and taxation rules (AEOC and AEOS) No serious infringements or repeated infringements of customs legislation or tax rules over the last 3 years. No record of serious criminal offences relating to the economic activity of the applicant. AEO criterion to be fulfilled by: a. the applicant and b. the person in charge of the applicant or exercising control over its management and c. the employee in charge of the applicant s customs matters.

37 AEO Programme - AEO Criteria - 1. Compliance with customs requirements and taxation rules (AEOC and AEOS) Examples of serious infringements of: Customs legislation: Smuggling, fraud, counterfeiting, infringements related to Intellectual Property Rights (IPR), prohibitions & restrictions. Taxation rules: Tax fraud, VAT fraud, offences related to excise duties. Serious criminal offences related to the economic activity of the applicant: Bankruptcy fraud, corruption, cybercrime, money laundering, infringements against health or environmental legislation.

38 AEO Programme - AEO Criteria - 2. Record Keeping (AEOC and AEOS) Satisfactory system of managing commercial- and transport records, which allow appropriate customs controls and which is consistent with the generally accepted accounting principles. Integrated into accounting system to allow cross checks. IT security measures, archiving procedures, protection against loss.

39 AEO Programme - AEO Criteria - 3. Proven financial solvency (AEOC and AEOS) Good financial standing Not subject to bankruptcy proceedings Finance from a loan from another person or financial institution letters of comfort and/or guarantees Payment of customs duties and all other duties, taxes and charges which are collected on or in connection with the import or export of goods. applicant can demonstrate sufficient financial standing to meet his/her obligations and fulfil his/her commitments

40 AEO Programme - AEO Criteria - 4. Practical standards of competence or professional qualifications directly related to the activity carried out (AEO-C) A proven practical experience of a minimum of 3 years in customs matters. A successfully completed training covering customs legislation. 5. Appropriate security and safety standards (AEOS) Building security Access controls Cargo security Business partner security requirements Personnel security Appointed security contact person Security awareness programmes

41 AEO Programme - AEO Benefits - Easier admittance to customs simplifications (AEO-C) Fewer controls Lower guarantees More favourable treatment à Prior notification of controls à Priority of carrying out the controls à Choice of place for controls Facilitations: e.g. better co-operation other enforcement agencies

42 AEO Programme - Overview AEO criteria and AEO benefits -

43 AEO Programme - AEO application procedure - AEO application form with mandatory annexes AEO guidelines - Annex 1: Self Assessment Questionnaire (SAQ & company risk assessment) Management statement/commitment

44 AEO Programme - AEO application procedure - National Customs Centre AEO: pre-audit all AEO applications Verification of compliance record AEO applicant: 1. Customs transactions / irregularities 2. Revoked or suspended authorisations 3. Information Customs Intelligence units 4. Information from other government agencies (e.g. Tax authorities, Ministry of Justice & Security, Ministry of Infrastructure, Air-& Port authorities.)

45 NL Customs AEO application procedure NC AEO Audit assignment EU database Applicant RC AEO Audit team Report Decision RC AEO

46 AEO Programme - AEO monitoring - Continuous monitoring by customs AEO field audit every 3 years Checking AEO criteria based on business internal monitoring system / risk assessments Possible results AEO monitoring: Positive result Re-assessement Suspension Revocation

47 Business monitoring system AEO criteria Compliance Record keeping Safety & Security Info to customs

48

49 AEO Programme - AEO monitoring -

50 AEO Programme Link with Certified Taxable Person (CTP) Why EU VAT system reform? Current VAT rules for cross-border trade between companies in the EU date back to Update is necessary. Less red tape: simplification of invoicing rules Tackling VAT fraud cross-border trade (EU estimate: 50 billion euro annually!). Exemption of VAT cross border trade: high risk factor. VAT fraud identified by EU MS as 1 of top 10 priorities.

51 AEO Programme Link with Certified Taxable Person (CTP) EC Proposal: introduction of a Certified Taxable Person (CTP) = a category of trusted business who will benefit from much simpler and time-saving rules. CTP criteria: compliance tax rules, reliable internal control systems/measures and proof of solvency (= comparable with AEO criteria!). Benefits: simplified tax procedures, trade facilitation, status of CTP (certificate) mutually recognized by EU MS.

52 Thank you for your attention!

53 Break Join us in the restaurant! After the break: Removing VAT obstacles to e-commerce in the single market Marie Lamensch

54 Removing VAT obstacles to e- commerce in the Single Market Prof. dr. Marie Lamensch Institute for European Studies at the Vrije Universiteit Brussel Member of the European Commission s VAT Expert Group Academic adviser for the OECD and the World Customs Organisation 54

55 The e-commerce VAT Package Summary overview One directive (Council Directive 2017/2455 amending the VAT Directive - Most of the new provisions) Two regulations (Council Regulation 2017/2459: Simplification re customer location for TBE and Council Regulation 2017/2454: Electronic exchange of data to combat fraud) New/amended provisions for: B2C TBE and other services B2C intra-eu remote sales (currently: distance sales) B2C Imports

56 The new rules

57 The new rules For TBE: Current: VAT in the country of destination from first EUR. An EU and a non-eu MOSS for streamlining VAT collection on TBE (bulk declaration per country 27 lines). 2 pieces of non-contradictory evidence to determine customer location (place of taxation). Platforms deemed suppliers if take part to the transaction (Art. 9a Impl. Reg).

58 The new rules New (as of 2019): A first threshold: option to charge VAT at origin if turnover related to cross-border TBE is below EUR For EU suppliers only. A second threshold: only one piece of evidence must be collected to determine customer location if domestic and cross-border TBE turnover is below EUR For EU suppliers only. Non-EU suppliers with an EU VAT number: may use the non-union scheme. Home country rules for invoicing (but record keeping for 10 years).

59 The new rules New (as of 2021) Deadline for submitting VAT returns extended (from 20th day to last day of the month following the end of the tax period). Correction to previous VAT returns: Can be made in a subsequent return instead of the original return to be corrected (up to 3 years back). With reference to the MSC, tax period and VAT amount.

60 The new rules For services other than TBE (as of 2021): Union and non Union scheme becomes available (From MOSS to OSS) EUR threshold not applicable (not even for EU suppliers)

61 The new rules For intra-eu B2C supplies Currently EUR (per country) threshold: taxation at destination when exceeding the threshold. New (as of 2021): EUR (per country) threshold is removed and replaced by (EU-wide) EUR threshold. The threshold takes into account both supplies of services and of goods. Union Scheme becomes available (possible that supplies of goods and services will have to be reported seperately 27 lines X 2). No more mandatory invoice requirement for such sales

62 The new rules Platforms deemed to receive and supply the goods in the cases where they facilitate : New Article 14a(2) VAT Directive: Where a taxable person facilitates, through the use of an electronic interface such as a marketplace, platform, portal or similar means, the supply of goods within the Community by a taxable person not established within the Community to a non-taxable person, the taxable person who facilitates the supply shall be deemed to have received and supplied those goods himself.

63 The new rules Deeming provision does not apply in C2C supplies (eg. Ebay) out of scope Deeming provision does apply even in domestic sales (still only when supplier is non- EU) Deeming provision does apply irrespective of whether platform is established in the EU or not and irrespective of whether the platform is registered to the OSS or not Deeming provision only applies for sales below EUR 150 (like OSS)

64 The new rules For B2C imports Currently: Customs procedure Exemption for low value goods (EUR 22) New (As of 2021): Removal of exemption for low value goods Replacement of the customs procedure by a hybrid system for supplies below EUR 150: Optional OSS registration. A fall back procedure: transporter liable to collect the VAT (monthly returns). Deeming provision for platforms cf intra-eu distance sales.

65 The new rules Optional OSS: Obligation to appoint tax representative (exc. NO because cooperation agt) Import exempt if supplier registered in the OSS database Periodical declaration and payment Liability of the transporter: Must take appropriate measures to ensure that the correct tax is paid No reduced rate under this procedure (a seperate customs declaration must be filled)

66 The new rules Deeming provision for platforms: New Art. 14a(1) VAT Directive: Where a taxable person facilitates, through the use of an electronic interface such as a marketplace, platform, portal or similar means, distance sales of goods imported from third territories or third countries in consignments of an intrinsic value not exceeding EUR 150, that taxable person shall be deemed to have received and supplied those goods himself. New Art. 66a VAT Directive: in respect of supplies of goods for which VAT is payable by the person facilitating the supply pursuant to Article 14a, the chargeable event shall occur and VAT shall become chargeable at the time when the payment has been accepted. ( can be an issue for platforms keeping money until delivery for security purposes).

67 The new rules New Article 242a VAT Directive: record keeping for all platforms (deemed supplier or not) Where a taxable person facilitates, through the use of an electronic interface such as a market place, platform, portal or similar means, the supply of goods or services to anon-taxable person within the Community in accordance with the provisions of Title V, the taxable person who facilitates the supply shall be obliged to keep records of those supplies. Those records shall be sufficiently detailed to enable the tax authorities of the Member States where those supplies are taxable to verify that VAT has been accounted for correctly.

68 The unfixed flaws

69 The unfixed flaws TBE: Enforcement (in particular non-eu businesses)? Mid 2016: registrations for EU as compared to registrations for non EU How to distinguish B2B from B2C? B2C intra-eu supplies of goods EUR threshold was difficult to monitor. What about EUR threshold?

70 The unfixed flaws For B2C imports What was the issue again? Undervaluations by offshore businesses! Does the new system avoid undervaluations?? OSS: Suppliers (you know, those who currently make the wrong value declarations!) now have to declare and pay the VAT directly weeks after the import was made No border controls as they are entitled to a fast lane. Transporter: Data provided by suppliers (you know, those who currently make the wrong value declarations!). Quality of risk assessment procedures? High administrative costs for customs replaced by compliance costs for businesses/transporters How can the EC claim that it will reduce compliance costs?

71 The implementation challenges

72 The implementation challenges Proposal for an IR expected by the end of the year For B2C TBE: 1 piece of evidence a relief for small (EU businesses) but what about government perspective? How to monitor the EUR threshold? (impact of EC proposal on rates?) For intra-eu B2C supplies of goods (distance sales): How to monitor the EUR threshold? Deeming provision (see infra)

73 The implementation challenges For B2C imports How to monitor optional reliance on OSS? What cost for the customs and what level of compliance can we expect? (exempt import and periodical declaration and payment - How to control?). For businesses using MOSS: Impact of proposal on rates? What if total freedom for MS without even common definitions for classes of goods/services? How to increase compliance when fall back procedure applies? What impact on postal sector?

74 The implementation challenges + How to implement the deeming provision (not in initial proposal)? Relying on platforms sounds like a good idea. However: Which platforms? Probably out of scope (as announced to VEG): aggregator websites that only send a link to another website or marketplace, comparison websites, search engines. Same criteria as for TBE? take part is narrower than facilitates MS willing to catch more than those processing payments But

75 The implementation challenges Most probably in scope: When platform brings customer and seller together and this results in a sale via the platform The actions finalising the supply are carried out via the platform (customer and seller s identification, ordering and payment, delivery information) The platform authorises the charging to the customer or the delivery of the goods The platform sets the general T&C of the supply Most probably also: if platform provides storage/fulfillment services or customer relating services (eg assisting with returns), the deeming provision cannot be rebuted

76 The implementation challenges Additional issue related to the creation of two supplies (seller to platform and platform to customer): To which supply does the transport relate? Seems like linking the transport to the supply made by the platform to the customer is the favoured option. In import situations: deemed B2B supply without transport: supply is outside the EU so no EU VAT In intra-eu situations: If the non EU seller has the goods in MS1 and the platform is in same MS: deemed domestic supply If the non EU seller has the goods in MS1 and the platform is on MS2: deemed B2B supply is in MS 1 (where goods are located): the platform will incur VAT in MS 1 and will have to reclaim it under the 8th Directive If the non EU seller has the goods in MS1 and the platform is outside the EU: deemed B2B supply is in MS1: the platform will incur VAT in MS1 and will have to reclaim it under the 13th Directive

77 The implementation challenges Issue of returned goods and related VAT reimbursement (supplier to reimburse sale price and platform to reimburse VAT ) More generally: OSS will become main collection tool for cross border supplies. Need to reinforce infrastructure (in particular if definitive system proposal is adopted)

78 Final comments

79 Final comments Directive/regulations were adopted. Seems like an irreversible process. However: Lack of enforcement jurisdiction is a fundamental and inherent weakness of a vendor collection model (fraud is not properly addressed) Reliance on intermediaries in the transaction chain a dangerous approach because Risks of double or non taxation Legal uncertainty Complexity Platforms will adjust

80 Thank you for your attention!

81 Reflections on the VAT Action Plan from a business perspective Allard van Nes LL.M. FrieslandCampina Rotterdam 22 February 2018

82 Our key figures (2016) Facilities in 33 countries 21,927 employees 18,906 member dairy farmers 11.0 billion Euros revenue Export to over 100 countries Every day millions of consumers

83 We operate worldwide Europe Africa and the Middle East Asia and Oceania North and South America 6,046 revenue * 1,053 revenue * 3,523 revenue * 379 revenue * 12,922 employees 1,050 employees 7,786 employees 169 employees 66 locations 6 locations 36 locations 6 locations Netherlands, Germany, Belgium, Greece, Hungary, Romania, Russia, France, Spain, Italy, Austria, United Kingdom Nigeria, Ghana, Ivory Coast, United Arab Emirates, Saudi Arabia, Egypt Figures 2016 * in millions of euros Indonesia, Malaysia, Singapore, Thailand, Myanmar, Vietnam, Philippines, China, Hong Kong, Pakistan, India, Japan, New Zealand United States of America, Brazil

84 with our brands

85 Single VAT Area Huge impact 2015 Total Annual Intra EU sales volume was EUR billion. Evolution of intra EU-28 export of goods, January November 2016 (EUR billion). Source: Eurostat website

86 Action plan on VAT The road to a Single VAT Area

87 Action plan on VAT The road to a Single VAT Area Recent proposals: Cornerstones (column III): a) Destination principle for VAT on cross border B2B transactions - Vendor should charge VAT of destination country unless b) Certified Tax Payer (CTP); c) One Stop Shop Quick fixes (column II): a) Simplification call-off stock arrangements; b) Requirements for VAT-id and identity in recapitulative statements for 0% rate; c) Chain transactions legal certainty; d) Burden of proof 0% rate legal certainty Other proposals: a) More flexibility for Member States on reduced VAT rates (column IV) b) Administrative cooperation between Member States (column II) c) Simplified VAT rules for SME s (column I)

88 The definitive VAT regime Preparing for the change I Prepare for CTP application - if not already AEO. Important for Intercompany transactions But the criteria will need to be more specific What is a serious infringement of taxation or customs rules? What is sufficient to have a high level of control? What are the criteria for solvency? Will the there be one ratio for all EU countries? What will be the relative weight of these criteria? 13a par.4: A taxable person applying for CTP shall supply all information required by the tax authorities in order to enable them to take a decision.

89 The definitive VAT regime Preparing for the change II Establish VAT rate for products in 26 other EU countries: 26 different methods Member States will publish their rules on the EU website, but that information is not legally binding. More flexibility for Member States to operate several reduced rates is not helping!

90 Example establishing the VAT rate = 78 searches

91 The definitive VAT regime Preparing for the change III Setting up compliance: Invoice requirements should eventually be determined by the country of the supplier. Logic for VAT determination in ERP systems need to be reinvented SAFT, Direct Reporting and Split Payments also applicable to cross border transactions? Will there be harmonization/coordination?

92 Definitive VAT system How will it work? Supplier 1. Goods + invoice 2. Goods + invoice Buyer 1 CTP Buyer 2 Germany 3. Goods + invoice Buyer 3 Netherlands Poland

93 Definitive VAT system How will it work? Supplier Netherlands 1. Goods + invoice 2. Goods + invoice Buyer 1 CTP Buyer 2 Germany Poland 3. Goods + invoice Buyer 3 Transaction 1: VAT payment subject to reverse charge. Transaction 2: Supplier charges German VAT; pays the VAT over to the German authorities through the One Stop Shop. Transaction 3: Supplier charges Polish VAT application of Split payment? VAT return through One Stop Shop; Polish SAFT required? Split payment?

94 Definitive VAT system How will it work? Supplier 1. invoice Buyer 1 CTP Goods 2. invoice Germany Buyer 2 Netherlands France

95 Definitive VAT system How will it work? Supplier Netherlands Buyer 1 CTP 1. invoice Goods 2. invoice Germany Buyer 2 France Art. 138a: Transport shall be allocated to supply made by Supplier to Buyer 1 if - Buyer 1 communicates the country of arrival; and - Buyer 1 is not VAT registered in Netherlands. Supplier 1 invoices under the reverse charge to Buyer 1. (With French VAT if not CTP) Buyer 1 supplies domestically in France (no border Crossing). Still reverse charged?

96 Definitive VAT system How will it work? Audits Proposal amending Reg. (EU) No 904/2010 strengthening administrative cooperation in the field of VAT: the Member State of establishment must start an enquiry when at least two Member States require this. Officials of requesting MSs shall take part in the administrative enquiry

97 Action plan on VAT The road to a Single VAT Area

98

99 Thank you for attending the seminar! Join us at thenetworking drinks in the restaurant! *We kindly ask you to return your badge.