The next Economic and Financial Affairs (ECOFIN) Council is taking place on May 24 and May 25, 2018. On May 24, 2018 there is a budget meeting. On May 25, 2018 an ordinary ECOFIN Council will take place. On May 11, 2018 the Dutch Minister of Finance sent an annotated agenda for these meetings to the Dutch House of Representatives. According to this annotated agenda several tax topics will be discussed during the ECOFIN Council of May 25, 2018.
According to this annotated agenda as sent by the Dutch Minister of Finance a.o. the following tax subjects are going to be discussed during the upcoming ECOFIN Council:
· Administrative cooperation in the area of VAT;
· A general reverse charge mechanism for VAT purposes; and
· VAT and e-publications.
Administrative cooperation in the area of VAT
According to the Dutch Minister of Finance the ECOFIN Council is trying to come to a decision on the European Commission’s proposal to amend Council Regulation (EU) No 904/2010 of October 7, 2010 on administrative cooperation and combating fraud in the field of value added tax.
The Bulgarian Presidency would like to reach an agreement on the Council Regulation on administrative cooperation in the field of VAT. The proposal published by the Commission on November 30, 2017 contains several concrete proposals. It is for example proposed to extend the set of instruments to combat VAT fraud together with other Member States, Europol, the European Public Prosecutor's Office (EOM) and the European Anti-Fraud Office (EAFO), the strengthening of Eurofisc and embedding TNA (transaction network analysis), measures against customs fraud and the establishment of joint controls by Member States on each other's territory.
A general reverse charge mechanism for VAT purposes
The Council is going to exchange views on a proposal for a Council Directive amending Directive 2006/112/EC concerning the common system of value added tax regarding a temporary application of a general reverse charge mechanism to apply to the supply of goods and services above a certain threshold.
During the ECOFIN Council an agreement will be sought on the proposal for a temporary application of a general reverse charge mechanism for deliveries of goods and services above a certain threshold. No progress was made on this matter since a blockade was imposed during the ECOFIN Council of June 2017. The Bulgarian Presidency would like to reopen the discussions. The Netherlands welcomes this and, like the vast majority of Member States, is in favor of the proposal. The Dutch Minister of Finance however states that he expects that the aforementioned blockade (which was made in connection with the negotiations on the proposal on e-publications) has not yet been lifted.
In the frame of the fight against VAT carousel fraud, it is made possible for Member States that meet certain conditions to, through a derogation request, temporarily apply a general reverse charge mechanism for VAT in domestic situations. Under this proposal it will be possible for Member States to shift the VAT due over domestic services and deliveries between entrepreneurs to the customer of that service. When applying this general reverse charge mechanism, no fractionated VAT payment will have to be made when B2B (Business to Business) supplies and services, are made. Instead the entire VAT payment will be made by the last link in the chain, which is the entrepreneur that makes the delivery to the (private) end consumer. At the moment it is already possible to apply the reverse charge mechanism in certain sectors that are considered susceptible to fraud. The underlying proposal expands the applicability of the reverse charge mechanism to all domestic supplies of goods and services with an invoice amount in excess of € 10.000.
VAT and e-publications
The ECOFIN Council is expected to exchange views on the matter of VAT and e-publications. In his annotated agenda the Minister of Finance states that the Bulgarian Presidency wants to reach an agreement on the proposed directive on e-publications. He furthermore states that the Netherlands wholeheartedly supports this. The Netherlands has previously called for the completion of this file and expressed its disappointment when in June 2017 the ECOFIN Council failed to reach an agreement. At the time, no agreement could be reached because the file was politically linked to the file concerning the general reverse charge mechanism for VAT purposes.
Click here to download the annotated agenda for the Eurogroup meeting of May 24, 2018 and the ECOFIN Council of May 25, 2018 that the Dutch Ministry of Finance has sent to the Dutch House of Representatives from the website of the Dutch Ministry of Finance. (The annotated agenda is only available in Dutch)
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