Given that simpler procedures are easier to comply with and easier to enforce, today's proposal should also help to improve VAT compliance and increase public revenues. VAT accounts for around 21% of Member States revenues, and yet around GBP 164 billion (Euro 193 billion) went uncollected in 2011 (see IP/13/844).
Algirdas Šemeta, Commissioner for Taxation, said: "The standard VAT return presents a win-win situation. Businesses will enjoy simpler procedures, reduced costs and less red tape. Governments will have a new tool to facilitate VAT compliance, which should increase the revenues they collect. Today's proposal therefore supports both our commitment to a business-friendly Single Market and our drive to improve tax compliance in the EU."
Every year, 150 million VAT returns are submitted by EU taxpayers to national tax administrations. Currently, the information requested, the format of national forms and the reporting deadlines vary considerably from one Member State to the next. This makes VAT returns for cross-border businesses a complex, costly and cumbersome procedure. Businesses operating in more than one Member State have also complained that it is difficult to remain VAT compliant, due to the intricacy of the process.
The standard VAT return proposed today simplifies the information that businesses will have to provide to tax authorities. The declaration will have only 5 compulsory boxes for taxpayers to fill in. Member States are given leeway to request a number of additional standardised elements, up to a maximum of 26 information boxes. This is a vast improvement on the current situation, whereby some Member States require up to 100 information boxes to be completed.
Businesses will file the standard VAT return on a monthly basis, while micro-enterprises will only be obliged to do it on a quarterly basis. The obligation to submit a recapitulative yearly VAT return, which some Member States currently demand, would be abolished. The proposal also encourages electronic filing, as the standard VAT return will be allowed to be submitted electronically throughout the Union.