VAT and Administrative Cooperation
A new Regulation on administrative cooperation in the field of VAT has been in force since 1 January 2012 (Council Regulation (EU) 904/2010 of 7 October 2010, OJ L268 of 12/10/2010, p.1). It was adopted by the Council of the European Union on 7 October 2010 and it repeals Council Regulation (EC) 1798/2003.
The aim of the Regulation is to improve administrative cooperation between Member States concerning VAT.
The following links provide information about the new Regulation.
- What is administrative cooperation and why is it important?
- Why is there a new Regulation?
- What does the new Regulation provide for?
- What has not changed?
- When do the Regulation and Directive take effect?
- Implementing rules
Administrative cooperation concerns the tax and customs administrations of EU Member States cooperating with one another to share information. Close cooperation between these bodies is vital to detect and reduce tax fraud.
Tax evasion and tax avoidance extending across the frontiers of Member States lead to budget losses and violations of the principle of fair taxation. They are also liable to bring about distortions of capital movements and of the conditions of competition. They thus affect the operation of the internal market.
In the field of VAT, this system of administrative cooperation was based on Regulation No 1798/2003. A new Regulation No 904/2010 of 7 October 2010 (OJ L268 of 12/10/2010, p.1) now sets up a new legal framework.
Council Regulation (EC) 1798/2003 of 7 October 2003 on administrative cooperation in the field of value added tax has been substantially amended several times. Since further amendments were to be made, in the interest of clarity a new regulation was envisaged. Moreover the instruments to combat fraud in the field of value added tax in Regulation (EC) No 1798/2003 needed to be improved. For example, recent practical experience of the application of Regulation (EC) No 1798/2003 in the fight against carrousel fraud had shown that in some cases it was essential to establish a much faster mechanism for the exchange of information, covering much more, and better targeted, information in order to combat fraud effectively.
It was also necessary to specify the conditions for the exchange of information obtained by a Member State from third countries and from other Member States.
In order to fight fraud effectively, it is essential to facilitate the exchange of information and the categories for which an automatic exchange needed to be identified.
Feedback is an appropriate means to ensure continual improvement of the quality of the information exchanged. A framework for the provision of feedback should therefore be put in place.
These modifications originated from an increasing awareness that VAT evasion and fraud can be combated only with the close cooperation between the competent authorities in each Member State responsible for the application of the provisions in that field.
In general, the new Regulation establishes the information that Member States must collect, store in their domestic databases and make electronically available to other Member States. The Regulation also defines access rights to this information in terms of persons and data, reinforces some existing mechanisms, and provides a legal basis for new administrative cooperation instruments, such as Eurofisc .
In particular, the new Regulation provides for:
– an extension of the responsibility of Member States in terms of administrative cooperation and protection of other Member States' tax revenues;
– a precise definition of the information to be collected and exchanged with other Member States via the automated access to databases by competent authorities;
– an enhancement of the databases on VAT-taxable persons and their intra-Community transactions through the inclusion in those databases of a range of information on the taxable persons and their transactions;
– an increase of the legal certainty of the information provided to taxpayers by VIES (VAT information exchange system) when asking for confirmation of VAT numbers;
– a framework guaranteeing the quality of information contained in Member States databases by setting up common minimum standards for registration/deregistration of taxpayers and risk analysis mechanisms;
– a legal basis for the setting up of an official network aimed at fighting fraud through a multilateral, fast and focused exchange of information which facilitates decentralised cooperation against specific types of frauds (Eurofisc).
- The organisation of the departments responsible for administrative cooperation in the Member States
- The mechanism for requesting other Member States information and conduct administrative enquiries;
- The presence of foreign officials during controls;
- The cross-border notification of decisions emanating from the tax authorities of another Member State;
- The procedures for organising multilateral controls;
- The provisions on data protection as provided for in Directive 95/46/EC(see page 31) of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data.
Exchange of information for specific procedures
In order to establish the one-stop shop scheme provided for by Council Directive 2006/112/ECof 28 November 2006 on the common system of value added tax, and to apply the refund procedure for taxable persons not established in the Member State of refund provided for in Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State, rules on the exchange and storage of information by Member States are required have been put in place.
This regulation has repealed Council Regulation (EC) No 1798/2003 as of 1 January 2012, with the exception of Chapter V (excluding Article 27(4)) that will remain applicable until 31 December 2012.
Articles 33 to 37 of this regulation will apply from 1 November 2010. Articles 38 to 42 will apply from 1 January 2012. Chapter V, except for Articles 22 and 23, will apply from 1 January 2013. Articles 43 to 47 will apply from 1 January 2015.
Following the adoption of Regulation (EU) No 904/2010 and in order to have a single set of rules on the exchange of information, Commission Regulation (EC) n. 1925/2004 of 29 October 2004 laying down detailed rules for implementing certain provisions of Council Regulation (EC) No 1798/2003) and Commission Regulation (EC) n. 1174/2009 of 30 November 2009 laying down rules for the implementation of Articles 34a and 37 of Council Regulation (EC) No 1798/2003 as regards refunds of value added tax under Council Directive 2008/9/EC needed to be amended.
For these reasons Commission Implementing Regulation (EU) No 79/2012of 31 January 2012 has been adopted. It lays down detailed rules for implementing Articles 14, 32, 48 and 49 and Article 51(1) of Regulation (EU) No 904/2010, repealing Regulations (EC) No 1925/2004 and (EC) No 1174/2009.