January 22, 2018

New VAT reform within the EU in an attempt to tackle cross border fraud

The EU Commission is preparing for the biggest reform of EU VAT rules in a quarter of a century, in an attempt to crack down on an estimated EUR 50 billion in tax revenue lost to cross-border VAT fraud between countries within the European Union (EU). Over €150 billion of VAT is lost every year, according to the commission, and about €50 billion of this is estimated to be due to cross-border VAT fraud. In addition, companies currently trading across EU borders have about 11% higher compliance costs than those companies trading within one EU country.
The new proposal suggests that goods should be taxed the same way from one EU country to another in the same way as goods are currently taxed when sold and shipped within one EU country. These new changes will take effect within the next couple of years and is expected to reduce cross-border VAT fraud by around 80%, and will therefore create a new and robust VAT system for the EU.
If you have any questions what this might mean for your North American company, please feel free to contact one of our VAT experts for further information.

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