From 1st January 2013, new EU VAT rules enter into effect

The European Commission underlined that new EU VAT rules enter into force from 1st January 2013. These rules are aimed at making life much simpler for businesses across Europe. Also, from 1st January 2013 enter into force stronger rules to fight tax evasion.

The new VAT rules will enter into force from 1st January 2013. According to the European Commission, these rules will make life much simpler for businesses across Europe. Also, they will improve Member States’ ability to assess and collect the taxes that they are due with a new Directive from 1st January 2013. In May 2012, the European Commission also proposed new rules to uniform the tax treatment for vouchers.

The new VAT rules include that the electronic invoicing will have to be treated the same as paper invoicing, enabling companies to choose the VAT invoicing solution that works best for them. This has the potential to save businesses up to €18 billion a year in reduced administration costs. Also, Member States will be allowed to offer a cash accounting option to small businesses with a turnover less than €2 million a year. This means that these SMEs will not have to pay the VAT until it has been received by the customer, thereby avoiding cash-flow problems for them.

With regard to fighting tax evasion, the Directive on Administrative Cooperation in the field of taxation lays the basis for stronger cooperation and greater information exchange between tax authorities in the EU. One of the key aspects of the Directive is that it brings an end to bank secrecy: one Member State cannot refuse to give information to another just because it is held by a financial institution. Moreover, tax officials may be authorised to participate in administrative enquiries in another Member State. They will also be able to request that their tax documents and decisions are notified elsewhere in the EU. The Directive has a wide scope, covering all taxes except those already covered under specific EU legislation (i.e. VAT and excise duties).