On 22 June, the ECOFIN Council agreed without discussion on the following VAT-related files:
- Measures to strengthen administrative cooperation in order to better prevent VAT fraud by:
- improving the exchange and analysis of information shared by the member states’ tax administrations and with law enforcement bodies;
- strengthening Eurofisc, a network of national tax officials for the exchange of information on VAT fraud, jointly processing and analysing all relevant data.
- A directive making 15% the permanent minimum standard VAT rate.
- A VAT deal with Norway that is designed to boost administrative cooperation with the EU.
The Council was also expected to agree on four “quick fixes” to improve the European VAT system:
- Simplification of VAT rules for companies moving goods from one Member State to another Member State where they are to be stored before being supplied to a customer known in advance (i.e. “call-off stock arrangements”).
- Simplification provided for chain transaction situations identifying the supply with which the intra-Community transport of goods should be linked.
- Simplification of the proof of transport of goods between two Member States needed for the application of the exemption to intra-Community supplies.
- Clarification that, in addition to the proof of transport, the VAT number of the commercial partners recorded in the electronic EU VAT-number verification system (VIES) is required in order to apply the cross-border VAT exemption under the current rules.
But before and at the ECOFIN Council’s meeting, France and Italy pushed for a fifth “quick fix” to be included: a VAT exemption for groups of taxable persons in the financial sector that pool services and share costs (i.e. cost-sharing groups-CSGs). Insurance Europe (along with most of the European financial sector) is strongly advocating for this exemption to be granted explicitly, following the invalidation of CSGs in the financial sector by the European Court of Justice last year.
Because this additional provision didn’t feature in the Commission’s original proposals, the EC and other Member States called on France and Italy to remove the fifth “quick fix” from the text. France and Italy refused and therefore the unanimity needed to introduce new EU tax rules was not achieved and none of the “quick fixes” was adopted at this meeting. It is now likely that the “quick fixes” will be discussed again at future ECOFIN meetings, the next of which will take place on 13 July.