Czech Republic: ECOFIN Abandons Plans For A Standard VAT Return; Czech Republic To Pilot Domestic Reverse Charge

ECOFIN’s latest monthly review of VAT measures includes abandoning plans for a standard VAT return across 28 countries. The Czech Republic has requested to pilot the domestic reverse charge, an anti-VAT fraud measure.

The EU’s Economic and Financial Affairs Council (ECOFIN) latest update on VAT measures includes, as anticipated, abandoning plans for a standard VAT return across 28 countries. The concept of a uniform EU VAT return was put forward in October 2013, to help companies operating in various European jurisdictions understand the different computation methodologies. While the one measure would result in cost savings, reaching a consensus in reporting standards differs across regions and would require time.

The Czech Republic has requested to pilot the domestic reverse charge, an anti-VAT fraud measure which you will find outlined in further detail in our paper, VAT reforms in Europe. To be reviewed for implementation, expansion of the domestic reverse charge mechanism is likely to reduce the reporting burden.

In the long term, it would force tax administrations in various countries to change the way they collect information, potentially leading to similarities in reporting across various EU member states and improving cash flow for businesses operating across Europe on a non-resident basis. This could be another way of achieving the concept of the single VAT return across the region.

ECOFIN meets monthly to review and co-operate on fiscal, monetary and wider economic issues within the European Union. It comprises of Finance Ministers from 28 member states.