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Commissioner responsible for Taxation and Customs Union, Statistics, Audit and Anti-fraud
Speaking Points on Standard VAT Return
Brussels, 23 October 2013
Ladies and Gentlemen,
I am very pleased to present to you today a proposal which will have a radical effect on the cost and simplicity of doing business in the EU;
A proposal which will remove one of the major tax obstacles for companies in our Single Market, saving businesses up to €15 billion a year.
A proposal which will also facilitate greater tax compliance and, as such, offer Member States important new revenues without the need for higher taxes.
I am talking about the new Standard VAT Return, which the Commission has adopted today.
The Standard VAT Return hits at the heart of one of the biggest problems reported to us by businesses operating in the Single Market, namely the headache of 28 very different systems for declaring VAT.
Taxpayers operating cross-border have to battle with a complex medley of information requirements, procedures and deadlines, just to declare the VAT that they owe.
For example, some Member States ask for monthly declarations, others ask for quarterly ones.
The number of information boxes to be completed ranges from as few as 6, in Ireland, to 99 in Hungary – and even up to 586 boxes in Italy.
At best, all these divergences are costly and burdensome. At worst, they deter businesses – especially small ones – from even attempting to expand cross-border in the EU.
The standard VAT return we have proposed today will eliminate this problem, by replacing the 28 diverse national systems with a simple and uniform EU approach.
The information required in declaring VAT, and the timelines to do it, will be standardised across Europe.
This effectively means that there will be little difference between filing a VAT return abroad and filing one at home.
As such, this proposal reflects the true spirit of the Single Market.
In addition to considerably easing life for businesses, the standard VAT return also has another major advantage.
It goes without saying that simpler rules are easier to follow and easier to enforce.
Therefore, the standard declaration should improve VAT compliance across the EU, as taxpayers better understand what's required.
The recently published study on the VAT Gap laid bare the catastrophic impact of non-compliance on national revenues.
In 2011 alone, uncollected VAT amounted to €193 billion.
I don't claim that such a vast amount can be recaptured simply with this one proposal.
The VAT Gap arises from a complex mix of factors, and requires a multi-faceted response.
Nonetheless, overly-complicated tax systems are clearly linked to lower levels of tax compliance, even amongst those who wish to play by the rules.
So I am confident that the simplifications of the standard VAT return will bear fruit, and that Member States will enjoy increased revenues as result of greater compliance.
To conclude, 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 and boost their tax intake.
Today's proposal therefore supports the EU's core commitments to a business-friendly Single Market and growth-friendly consolidation in the EU.