VAT management, an ongoing concern for companies
Due to legislative changes and under the influence of Court of Justice of the European Union jurisprudence (ECJ), the common system of VAT undergoes a perpetual evolution. Since January 1st 2010, changes resulting from the « VAT package » strengthen harmonization and simplify certain procedures such as reimbursement of VAT for foreign persons established in another Member State. Nevertheless, the “VAT package” has required many adjustments of the information systems. It has also created new reporting requirements (recapitulative statement for provided services). It still raises numerous questions and fear of inconsistency of legislation among the Member States despite the recent clarification provided by the Regulation n°282/11 that came into force on July 1st 2011.
Among others, issues of concern include for example the capacity of taxable person of specific structures such as funds which is or not recognized by the different Member States; the concept of “non intervening” « permanent establishment» for the designation of the person liable for payment of VAT and also determining the place of taxation for cultural, artistic, sporting, scientific, educational services and of the organization of fairs and exhibitions…
Vigilance is required, especially for cross-border transactions that may in addition be parasitized by carrousel fraud against which tax administrations are struggling with an increasing strength.
Other changes already in perspective…
The new Directive on invoicing will come into force on January 1st 2013. It will require new adjustments of the information systems and could open up real perspectives of simplification for electronic invoicing.
Who knows, the Directive draft on insurance and financial services could finally see the light…
The concerned companies will also have to prepare for new rules for the taxation of electronic services which will come in force in 2015.
On a longer run, new projects are expected to emerge from the broad based consultation launched by the European Commission as part of its « Green Book » on the future of VAT.
The abundant jurisprudence of the ECJ on VAT issues has recently been particularly interesting (yet sometimes troubling) regarding cases of interest under all European jurisdictions such as the regime applying to transfers and debt collections or the recovery of VAT paid on supplies of services acquired for the purpose of the sale, by a company, of its interest in another company.
As part of a dispute concerning a client assisted by CMS BFL, the French Conseil d’Etat (administrative supreme court) referred to the ECJ for a preliminary ruling that will interest companies with branches abroad and, banks in particular, for the calculation of their right to deduct.
Contact
Elisabeth Ashworth – CMS VAT Group coordinator
T +33 1 47 38 42 96
E elisabeth.ashworth@cms-bfl.com
CMS
If your organisation has to deal with national and international tax issues on a daily basis, against an increasingly complex legal background, contact us. To help you to tackle these complexities, our organisation has over 350 lawyers who offer comprehensive tax planning and advice services across Europe. We also have tax specialists Africa (more specifically in Maghreb), the Americas and Asia.
For specific requests concerning VAT matters, do not hesitate to contact Elisabeth Ashworth, our CMS VAT Group coordinator or your usual CMS contact should you wish to discuss any new challenges your business is facing.
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