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VAT cross-border rulings, a success?

The EU VAT Forum has made a first evaluation of the VAT cross-border rulings pilot case. As a result, national tax authorities and businesses favor extending the initiative to other EU Member States.

Within the framework of the EU VAT Forum, several EU Member States have agreed to participate in a test case for private VAT ruling requests relating to cross-border situations. The test case started on 1 June 2013 and is scheduled to last until the end of 2014.

A Cross Border Ruling (CBR) can only be requested if the transaction(s) envisaged are complex and have a cross-border aspect in two or more participating Member States and has to be requested in the participating MS where a taxable person concerned is registered for VAT purposes.

At the moment the participating Member States are Belgium, Estonia, Spain, France, Cyprus, Lithuania, Latvia, Malta, Hungary, Netherlands, Portugal, Slovenia, the United Kingdom, Finland and Sweden.

Since the introduction several CBR requests had to be rejected because one or more of the eligibility conditions were not fulfilled, e.g. not enough information was provided, the question was not a Vat question or the case concerned a general information request. The interim report mentions that most requests were made in the UK and Belgium.

It was concluded that more clarity on the meaning of ‘complex transactions’ is required and that the CBR could also be used for new to be introduced legislation and envisaged transactions. Some participants (business and CBR contact points) observed that the response time should be reduced. In some cases, it apparently took about 6 month (also due to translation requests), in this respect the requestors should be informed about the acceptance of a request and about the expected time required to answer the specific request.

The requests for which an agreement could be obtained of all authorities concerned,
can be published as “cross border rulings” on a voluntary basis. The interim report mentions five cases all described in a neutral way. There were five CBR’s published, from which four dealt with the determination of the place of supply of the service.

The published cases concerned the place of supply for an in-house training, for organizing a symposium to present new products to customers, the topping up of SIM cards and renovation services. One case concerned the Vat treatment applicable to the sale of tyres, assembled or to be assembled.

The CBR project is due to end a the 31st of December 2014. In December we can expect a meeting of the sub-group where they will discuss how to continue the CBR project and how to involve the other Member States currently not participating.

We would like to see that the concept is continued and all 28 Member States will embrace the CBR project. This way businesses that operate cross border have the possibility to approach one Member State and get one answer applicable in more Member States which avoids possible double taxation. However, to make it really successful all Member States should participate.

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