Not long ago I wrote about the single VAT return and how it may be the endgame for complexities across the EU. Fast forward two months, and it would appear that the endgame has come much sooner than expected.
The developments around this initiative have been thickening more than the plot of a Brazilian soap opera, and in the latest twist, it appears the only victim of the endgame is the single VAT return itself.
Latest information from the European Commission indicates that they have decided to swipe left, taking this project off their agenda moving forward. It appears the prospect, while attractive at first, turned out to be too high maintenance, lacked substance and was incredibly inflexible.
Instead of pushing ahead with the initiative, the EU Commission has published a 2016 strategy document/work programme in which it points towards introducing an action plan tackling existing issues with VAT returns, and also hints at the withdrawal of several VAT proposals - where no considerable progress has been made.
What went wrong
Many will ask, where did it all go wrong with the ambitious concept of a single VAT return? It’s pretty safe to presume it was the differing requirements of EU member states (as mentioned in my first tet-a-tet) that were the biggest obstacle to overcome. One can imagine it may have resembled a stereotypical gathering of relatives over the December holiday season; put them at the same table and ask them to talk to each other. It was always going to be difficult to get an international forum to agree on the contents of a document as crucial for reporting purposes as the VAT return, but I think that even the orchestrators of the concept of the single VAT return didn’t see this coming.
What was supposed to be simple in construction turned out to be an incredibly painful process. With different countries treating the VAT return not only as a reporting tool, but also as a statistical one, it was always going to be challenging to part ways with their well-established and relatively well-functioning forms.
It may be that several countries which at present gather an extraordinary amount of data were reluctant to let go of this in favour of simplification. Other countries where VAT returns are not particularly complicated may have seen this as an unnecessary administration burden and added expense.
On the horizon we do have expansion of the MOSS scheme and reverse charge rules as outlined in our recent briefing paper. Let’s see how this develops.
One “season” in the EU VAT series is coming to an end, it will be interesting to see what the next instalment will contain. Let’s hope that the December break is going to give those that decide the fate of VAT the gift of clarity in respect of the direction VAT should take in the New Year and beyond.
Click here to download the paper “VAT reforms in Europe: past, present and future.”
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