The European Union (#EU) and the United Kingdom (#UK) will soon start negotiations to implement an #inter-cooperation legal framework, regarding the Value Added Tax (#VAT).
After Brexit, this would be a first step towards some sort of “reconciliation” that would allow to promote and assure a uniformed mutual assistance mechanism, in the field of taxes on consumption.
The Commission issued, on the 4th of September 2023, a Proposal for a Council Decision, on the position to be taken on behalf of the EU within the Trade Specialised Committee on Administrative Cooperation in VAT and Recovery of Taxes and Duties established by the Trade and Cooperation Agreement between the EU, of the one part, and the UK of the other.
The objective of is to establish a legal framework, to enable administrative cooperation between the tax authorities of each and every Member State with His Majesty’s Revenue and Customs (HMRC), so that they may assist each other in (i) ensuring compliance with VAT legislation; (ii) protecting VAT revenue, and (iii) recovering claims relating to taxes and duties (such as the reimbursement requests, currently being made in accordance with the Thirteenth Directive).
Consequently, the Commission’s proposal whishes that both Parties enter into an international agreement, by which an effective and enduring cooperation is established, in a fashion similar to the one already in force, amongst Member States, regarding Council Regulation (EU) Nº. 904/2010 (which is the effective EU legal act, establishing the administrative procedures, concerning the exchange of information, amongst domestic tax authorities, for the proper application of the common system of EU-VAT, particularly on intra-Community transactions but also on fighting VAT fraud/abuse).
In essence, the main goals of the above-mentioned Commissions’ proposal are:
- The adoption of electronic forms to be used for the communication for administrative exchange of information, cooperation and tax recovery assistance requests, between the UK and the Member States (i.e., between the competent authorities designated by each of the Parties’ tax authorities, for the exchange of information);
- The establishment of rules for the execution related with tax recovery requests (including precautionary measures);
- The implementation of a Service Level Agreement (i.e., an agreement that will establish the technical quality and quantity of the services for the functioning of such communication and information exchange systems);
- The amounts of: (i) the UK financial contributions to the EU budget for the one-off adaption of the electronic forms for VAT administrative cooperation and tax recovery, and (ii) the annual contribution covering the expenditures related to the development, maintenance and upgrade of the IT solutions used (e.g., e-forms).
Pedro Costa Monteiro
October 2023