New VAT regulations cause major problems

  • Cross border services become simpler
  • However executing problems are lurking
  • Tax authorities should be more lenient towards companies

The new European VAT regulations which will come into force January 1st 2010 result in increasing administrative costs for businesses. These regulations stipulate amongst others where VAT is being levied over services from business to businesses.

Not the service provider, but the buyer of the service owes the VAT in future, which will simplify cross border service. Which is better, however the problem is that, the date of VAT payment over these services is no longer determined based on the customary Invoice date but based on the date the service are rendered. This will result in major executing problems.

It is up to the Dutch Lower House to put a stop to this. The Lower House will hold a meeting shortly about the adjustment of the Dutch VAT-legislation to the new requirements.

It is up to the Lower House to insist on an urgent change of this – unexpected – European measure and to make sure that the tax authority in the meantime act with lenience.

The new refund procedure for VAT paid in another member state of the European Community also causes great concern. As from January 1st 2010 refund claims should be submitted digitally (in a portal) with the counties own local tax authority. The latter forwards the claims to the concerned member states. However it is unclear whether the tax authorities in other member states are ready to handle the refund claims per January 1st adequately, whether there is sufficient capacity to send invoices along and whether proxies get access to the portal. The latter is very important to small and medium-sized enterprises, because they often use proxies for VAT refund claims.

Source: VNO-NCW