EU Parliament Advances Proposal to Overhaul VAT System

February 26, 2019 Kelsey O'Gorman

Last year, the European Commission proposed technical measures that would overhaul and redefine VAT rules for intra-community business-to-business transactions for supplies of goods. This proposal is part of an effort to adopt a definitive EU VAT system, which would simplify many procedural and administrative processes as well as help combat VAT fraud. Currently, intra-community transactions are "split" into two transactions: a VAT-exempt sale in the member state of dispatch and an acquisition taxed in the member state of dispatch. Under the Commission's plan, the VAT rules are revised to "define the cross-border trade of goods as a single taxable supply, which will ensure that goods are taxed in the member state where the transport of the good ends – as it should be." The European Parliament has now voted 493-48 to support these measures, and has recommended that the Commission go even further in (a) mandating annual disclosure of frauds committed in each Member State, (b) tightening proposed requirements that would exclude certain businesses from the new rules, and (c) creating an information web portal for small and medium sized businesses. For more information, please see the EU Parliament's legislative resolution here.

About the Author

Kelsey O'Gorman

Kelsey O'Gorman is a Junior Regulatory Counsel at Sovos. Within Sovos' Regulatory Analysis function, Kelsey focuses on global sales tax and VAT issues, supporting both the tax determination and reporting engines. Kelsey received her B.A. in Psychology from University at Buffalo and her J.D. from Roger Williams University School of Law. She is a member of the Massachusetts Bar.

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