Following the opinion of the advocate general published last November , the ECJ gave its decision in Farkas case (C-564/15) . This judgement has reduced the powers of Member States to impose penalties on reverse charge transactions that are incorrectly reported. This case is important for non-established companies registered for VAT in other EU countries, as these businesses are often involved in reverse charge transactions.
In summary, the ECJ position is as follows
The ECJ recently ruled a case concerning the right of public entities to charge VAT on road tolls. The case concerned an Irish motorway run by a state-owned operator (National Roads Authority). Initially, the advocate general proposed that VAT should also be charged on these tolls, however the ECJ decided that VAT was not due on the grounds of no direct competition between the public and private entities managing motorways in Ireland. According to the European Court of Justice, there is no direct competition between private and public entities where the roads and service provided is clearly separated.
Last 26 December 2016, the EU Commission put forward a proposal to introduce a general reverse charge mechanism on domestic sales within each EU country. The measure was initiated by certain EU countries such as Czech Republic on the grounds of reducing VAT fraud. Missing trader fraud or carrousel fraud costs over 100 billion Euros to member States every year. Proposals to reduce this fraud include the VAT Action plan or the General reverse charge mechanism.
A general reverse charge would require a significant deviation from the current fractioned payment of VAT, where all businesses in the production...Read more
The European Court of Justice recently gave a ruling that will make more flexible the requirement of being registered in the VIES database in order to allow an intra-Community supply to be zero rated.
In case Euro Tyre Bv ( C-21/16 ), a Polish customer provided a VAT number that was valid in Poland and up to date in Poland but was not registered in the VIES database. The ECJ took a position allowing the intra-Community supply to be zero rated even if a VIES number is nto provided by the customer where there are no evidence of fraud or VAT avoidance and where all other formalities have been met.
The two main conditions...Read more
Last 1 December 2016, the European Commission published its long awaited plan on VAT rules for online cross-border sales of goods. As from 2021, most current foreign VAT registrations of online sellers may be merged into a single one stop-shop VAT number where all sales in Europe are reported.
Under the current rules, selling good over the internet to a non-VAT registered consumer in another EU country is subject to the distance sales regime. Under this scheme, a VAT registration in the country of the customer is not required until the sales in that country exceed €35,000 (Germany,...Read more
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