European Commission holds orientation debate on the future for VAT in the EU

The College of Commissioners today held an orientation debate on the way forward for VAT in the EU. The Commission plans to put forward an Action Plan on this issue in March. The VAT system needs reform: the ‘VAT gap’, which is the difference between the expected VAT revenue and VAT actually collected in Member States, was almost €170 billion in 2013. Cross border fraud itself is estimated to be responsible for a VAT revenue loss of about €50 billion annually in the European Union.  At the same time, the current VAT system remains fragmented and creates significant administrative burdens, especially for SMEs and online companies. Finally, the system needs to be modernised to reflect innovative business models and technological progress in today’s digital environment.  A College Read-Out by Vice-President Dombrovskis will take place after the College meeting and can be followed live on EbS.