European Commission adopts Communication on the future of VAT
On 6 December 2011, the European Commission adopted a Communication on the future framework of VAT in the EU highlighting that the aim should be to move towards a "simpler, more robust and efficient" VAT system in the single market that is based on the destination principle (as opposed to the currently applied principle of origin).
According to the Commission, there are three overriding objectives which shape the vision for the new VAT system, namely (i) VAT must be made more workable for businesses, (ii) VAT must be made more efficient in supporting Member States' fiscal consolidation efforts and sustainable economic growth, and (iii) there is a need to stop the huge revenue losses that occur today due to uncollected VAT and fraud.
The Communication also lists priority areas for action. Amongst other issues, the Commission will examine some of the current exemptions to assess whether the economic, social or technical reasons for them are still valid and whether the way they are applied can be improved. With regards gambling, for instance, the current Sixth VAT Directive 2006/112/EC indicates that "Member States shall exempt (...) betting, lotteries and other forms of gambling, subject to the conditions and limitations laid down by each Member State". The Commission has, however, not yet given further details about the scope of its revision of exemptions for the time being.
Please find here the European Commission Communication.
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