Ministers hope for deal on EU VAT payments

EU finance ministers will discuss controversial plans to simplify VAT registration and payments at a meeting in Luxembourg on Wednesday.

The plans for a ‘one-stop-shop’ for cross-border VAT payments have been put forward by EU tax commissioner László Kovács and backed by the Austrian EU presidency.

The proposal would allow any EU company to carry out all its VAT obligations in the country where it is based, regardless of where it does business. It would also permit companies to use one single VAT number throughout the EU.

There is broad political backing for the idea of a one-stop-shop and a simplified electronic declaration procedure, although there are still disagreements over whether the scheme should be optional or compulsory and on its scope.

Other VAT measures will also be up for discussion, including a proposal that would allow VAT on services to be charged in the consumer’s, rather than the supplier’s, home countries.

Several member states have expressed reservations about the proposal, fearful that they could lose lucrative tax revenues from the supply of some services such as cross-border television suppliers.  

Taxation is always a sensitive area for EU ministers, with each country keen to defend its own tax interests.

But Kóvacs is continuing to push for greater harmonisation of EU tax rules, arguing that it would facilitate trade within the internal market.

Ministers must give their unanimous backing to the whole package of VAT measures for them to come into force.

The meeting will also include a discussion on the European commission’s proposal to allow Slovenia to become the 13th member of the eurozone.

Both Slovenia and Lithuania asked the commission to assess their readiness to join the single currency on January 1 2007, but only Ljubljana was considered ready.

MEPs last week passed a resolution calling on the commission to clarify the criteria it used when judging the two dossiers after Lithuania missed out only because of marginally high inflation.

However, ministers will not take a final decision until after the EU summit later this month, with the Ecofin meeting of July 11 the most likely date.

Reports on the progress being made by the other eurozone hopefuls – the eight other new member states plus Sweden - Denmark and the UK have an opt-out - will be made by the commission in October.

Ministers will also discuss the state of play in ongoing talks with the US on economic issues ahead of the EU-US summit meeting on June 21, and will discuss the simplification of EU statistics following a request from the Dutch government.

The council will, as usual, be preceded by a meeting of the 12 eurogroup finance ministers, who are expected to focus on the efforts of several countries to cut public debt levels in line with EU stability criteria.

Italy’s new finance minister Tommaso Padoa-Schioppa has pledged that he will do all he can to bring public spending under control, aiming to hit the EU’s target of three per cent of GDP by the end of next year.

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