COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Seventh report under Article 12 of Regulation (EEC, Euratom) n° 1553/89 on VAT collection and control procedures
Date: 2014-02-12
Institutions: European Commission
Subjects: EU Member State, VAT, VAT resource, tax collection, tax evasion, tax reform













EUR-Lex - 52014SC0038 - EN











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52014SC0038

COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Seventh report under Article 12 of Regulation (EEC, Euratom) n° 1553/89 on VAT collection and control procedures /* SWD/2014/038 final */









COMMISSION STAFF WORKING DOCUMENT
Accompanying the document
REPORT FROM THE COMMISSION TO THE
COUNCIL AND THE EUROPEAN PARLIAMENT
Seventh report under Article 12 of
Regulation (EEC, Euratom) n° 1553/89 on VAT collection and control procedures
Contents
Contents. 3
I............ INTRODUCTION.. 4
II........... ANALYSIS. 6
CHAPTER 1:
Selected Issues on Organisation of Tax Administrations. 6
CHAPTER 2:
VAT Identification, Registration and Deregistration. 10
A........... Threshold and Stratification of VAT Registrations. 10
B........... VAT Registration Procedures. 13
CHAPTER 3:
Customs Procedure 42. 19
CHAPTER 4:
Submitting VAT Returns (Filing) and Payment 22
CHAPTER 5:
VAT Collection and Recovery. 29
CHAPTER 6:
VAT Audit and Investigation. 36
CHAPTER 7:
Tax Dispute Resolution System.. 43
CHAPTER 8:
VAT Compliance. 50
III......... RECOMMENDATIONS. 54

 INTRODUCTION
 In
     2011 the total amount of VAT revenue collected in the EU was around € 901
     billion, which represented 7.1 per cent of GDP-EU-27 and 18.4 per cent of
     total tax revenue, including social contributions.[1]
     The EU VAT system embraced around 26.5 million VAT taxable persons. The
     VAT-gap, which is the difference between the amount of VAT actually
     collected and the theoretically collectable[2] amount of
     VAT, is estimated at 18.4 per cent of GDP-EU-26[3].
 In
     2011, the VAT own resource represented 11 per cent of the EU revenue,
     being around € 14 billion. For the calculation of the VAT own resource, as
     a rule, a uniform rate of 0.30% is levied on the harmonised VAT base of
     each Member State. However, this VAT base is capped at 50% of GNI for each
     Member State. In addition, for the period 2007-2013, 4 Member States have
     reduced VAT call rates: 0.225% for Austria, 0.15% for Germany and 0.10% for the Netherlands and Sweden. Some other corrections exist, in particular the UK rebate. The efficiency of VAT collection and control in the Member States may impact the
     amount of VAT own resources due by the Member State concerned as well as
     the relative share in total own resources of other Member States.
 Article
     12 of Council Regulation 1553/89[4]
     on the definitive uniform arrangements for the collection of own
     resources accruing from VAT requires the Commission to submit a report to
     Parliament and Council every three years on the procedures applied in the
     Member States for registering taxable persons and determining and
     collecting VAT, as well as on the modalities and results of their VAT
     control systems. This report should enable Member States to assess risks
     and identify opportunities to improve VAT control and collection systems.
     Six reports have been made since 1989.
 The
     current report, building on the recommendations of previous reports[5]
     and taking into account progress already made at EU and national
     level, aims at measuring improvements in VAT administration in Member
     States within the framework of Article 12 of the above mentioned
     Regulation. It takes into account recent developments in tax administration
     with increased emphasis on preventive measures and promoting voluntary
     compliance. It aims to identify good practices in the various steps of an
     effective tax collection, measured against common benchmarks.  
 In
     order to prepare this report, a questionnaire on selected issues has been
     submitted to all Member States to pool the information needed for the
     report[6].
     The data submitted were discussed on several occasions with the Member
     States. Generally, the data included in the report reflect the situation
     up to 31 December 2011, unless otherwise indicated. Later developments are
     covered only if information was made available by a Member State.
 ANALYSIS 

CHAPTER 1: Selected
Issues on Organisation of Tax Administrations

 In
     around half of the Member States the tax administration functions as a
     semi-autonomous body.
     Autonomy is essential to a good performance of a tax administration. Over
     the last decades, tax administrations have been faced with the need to  
     deliver services more effectively and at a lower cost to citizens and to
     address deficiencies in traditional procedures and structures seen as too
     rigid to respond to the chal­lenges confronted by government in modern
     society. As a basic principle, autonomy can lead to better performance by
     removing impediments to effective and efficient management while maintain­ing
     appropriate accountability and transparency. As a result, there has been a
     tendency for governments to increase the autonomy of its departments and
     agencies. The OECD[7] has identified a number
     of different categories of institutional arrangements for tax
     administrations: (i) a single or multiple directorate(s) within the
     Ministry of Finance; (ii) a unified semi-autonomous body, the head of
     which reports to a Minister and (iii) a unified semi-autonomous body with
     a board, the head of which reports to a Minister. Table 1 gives an
     overview of the Member States tax administrations' position in this field
     and compares the degree of autonomy in what concerns the: (i) budget; (ii)
     management of human resources and (iii) organisational structure.

Table 1 - Autonomy of tax
administration[8]
   || AT || BE || BG || CY || CZ || DK || EE || FI || FR || DE || EL || HU || IE || LT || LV || LT || LU || MT || NL || PL || PT || RO || SK || SI || ES || SE || UK 
 1.The tax administration is: ||   ||   ||   ||   ||   ||   ||   ||   ||   ||  [9] ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 a) A department of the MoF || Y || Y ||   || Y ||   ||   || Y || Y || Y ||   || Y ||   ||   ||   ||   || Y || Y || Y || Y || Y || Y ||   ||   ||   ||   ||   ||   
 b) A  semi-autonomous body ||   ||   ||   ||   || Y ||   ||   ||   ||   ||   ||   ||   || Y ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   || Y ||   ||   
 c) A semi-autonomous. body with a board ||   ||   || Y ||   ||   || Y ||   ||   ||   ||   ||   || Y ||   || Y || Y ||   ||   ||   ||   ||   ||   || Y || Y || Y ||   || Y || Y 
 2.Can the tax administration: ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 a) Design its' own organisational structure? || Y || Y || Y || Y || Y || N || Y || Y || Y ||   || N || N || Y || Y || Y || Y || Y || N || Y || N || Y || y || Y || Y || N || Y || Y 
 b) Set the remuneration levels? || N || N || Y || N || Y || N || Y || Y || N ||   || N || N || N || N || Y || Y || N || N || N || Y || N || N || Y || N || Y || Y || Y 
 c) Set its staffing levels? || N || Y || Y || Y || Y || N || Y || Y || Y ||   || N || N || N || Y || Y || Y || Y || N || N || Y || N || N || Y || Y || N || Y || Y 
 d) Hire and fire staff? || Y || N || Y || N || Y || Y || Y || Y || N ||   || N || Y || Y || Y || Y || Y || N || N || N || Y || N || Y || Y || Y || Y || Y || Y 
 e) Discretion over operating expenditure? || Y || Y || Y || Y || Y || Y || Y || N || Y ||   || N || Y || Y || Y || Y || N || Y || Y || N || N || Y || Y || N || Y || Y || Y || N 
 f) Discretion over capital expenditure? || N || N || Y || Y || Y || Y || Y || N || Y ||   || N || Y || N || Y || N || N || N || N || N || N || N || Y || N || N || Y || Y || N 

 The
     organisational structure of tax administrations and the position of the VAT
     administration differ across Member States. Over the last decades, the
     organisational structure of many tax administrations has been subject to
     major reforms. There is a trend to aggregate direct taxes, indirect taxes
     and customs. Customs is under the same management structure as VAT
     in several Member States (AT, BE, CY, DK, EE, ES, IE, LV, MT, NL, PT, SI and UK). There is also a trend to create distinct units devoted to VAT
     fraud. Currently, eight Member States do not have a specialised VAT fraud
     unit. Generally speaking, there is an evolution from structures
     based largely on "tax or legislation type" criteria, to a
     process- or function-based organisation. A number of administrations have
     evolved towards a "taxpayer type" approach. The taxpayer
     approach embraces, inter alia, the creation of specific units for
     large taxpayers, high wealth individuals and self-employed. Risk
     management units support the tax payer approach. Table 2 gives an
     overview of the position of the tax administrations of Member States in
     this field.

Table 2 - Selected issues on
organisation of tax administration[10]
 Country || Structure of tax administration || Large taxpayer unit || Enforced debt collection unit || VAT fraud unit || High wealth individduals unit || Risk management unit 
 AT || T, TP || Y || N || N[11] || N || Y 
 BE || ALL || Y || Y || Y || N || Y 
 BG || F || Y || Y || Y || N || Y 
 CY || T || N[12] || Y || Y || N || N 
 CZ || T,F || Y || Y || Y || N || Y 
 DK || ALL || Y || Y || Y || N || Y 
 DE || T, TP || Y || Y || Y || N || Y 
 EE || ALL || Y || Y || N || N || N 
 ES || ALL || Y || Y || Y || N || N[13] 
 FI || MATRIX || Y || Y || Y || N || Y 
 FR || TP || Y || Y || Y || Y || N 
 EL || ALL || N || Y || N || Y || N 
 HU || F || Y || Y || Y || N || N 
 IE || TP || Y || Y || Y || Y || Y 
 IT || F || Y || Y[14] || Y || N || N 
 LT || F || Y || Y || Y || N || Y 
 LV || F || Y || Y || N || N || N 
 LU || T,F || N || Y || Y || N || N 
 MT || ALL || N || Y || Y || N || N 
 NL || F || Y || N || Y || N || Y 
 PL || ALL || Y || Y || Y || N || N 
 PT || F || Y || Y || Y || N || N 
 RO || ALL || N || Y || N || N || N 
 SE[15] || ALL || Y || Y[16] || Y || Y || N 
 SI || F,TP || Y || Y || N || N || N 
 SK || F || Y || Y || Y || N || Y 
 UK || ALL || Y || Y || Y || Y || Y 
Conclusion

 Although
     autonomy is essential to a good performance by a tax administration, in
     many countries there are still significant constraints on management. There is a trend towards
     the creation of autonomous agencies (around 50 per cent of Member States).
     This institutional arrangement offers, in general, more budgetary autonomy
     as well as autonomy in the management of human resources and the design of
     the organisational structure. However, there is no silver bullet solution
     to this question, as some countries have granted a high level of autonomy
     to the tax administration within the Ministry of Finance. 
 There
     is a trend from a tax-type towards a taxpayers-type organisational
     structure. Most
     Member States have a large taxpayers function; however, very often it is
     merely an audit centre and does not embrace filing, payment, enforced
     collection or taxpayer services. Ten Member States have a distinct risk
     management unit, supporting a holistic compliance approach. Very few
     countries have a distinct function responsible for the compliance
     management of high wealth individuals and self-employed.

CHAPTER 2: VAT Identification, Registration and Deregistration
A.           
Threshold
and Stratification of VAT Registrations 

 Within
     the EU, on average in 2011, taxpayers are required to register for VAT
     when total turnover exceeds threshold of € 30.611[17]. Businesses below
     the threshold may voluntarily register to participate in the VAT system.
     DE, ES, IT, MT, NL and SE do not apply a threshold for VAT registration of
     their small businesses. In other Member States, thresholds vary greatly
     from a minimum of € 5.000 (EL) to a maximum of € 83.802 (UK). Furthermore, some Member States apply specific thresholds and options depending on the
     sector of activity on the basis of Directive 2006/112/EC of 28 November
     2006 on the common system of value added tax (hereinafter "Directive
     2006/112").

Graph 1 – Overview of VAT
registration thresholds[18]

Note: EL(a) threshold for provision of services; EL(b) threshold
for provision of goods. FR(a) threshold for provision of services and hotels;
FR(b) threshold for lawyers authors and artists; FR(c) threshold for sales;
IE(a) threshold for services; IE(b) threshold for goods.

 Around
     22 per cent of VAT taxpayers are below the threshold for mandatory
     registration and have a net VAT liability[19] close
     to nil.  This
     may indicate a loss-making activity in the segment or a compliance problem
     resulting from overvaluation of deductible VAT (embracing private
     expenditure) or undervaluation of turnover. 
 The
     vast majority (around 65%) of the registered VAT taxable persons, have a
     turnover not exceeding €100.000 and contribute little to VAT revenue. 
     Graph 2
     shows the distribution of registered businesses by turnover and
     contribution in terms of net VAT declared liability and compares it to the
     typical segmentation of Taxpayers and Revenue Collections.  It is
     generally admitted that a small number of large enterprises (typically
     less than 1 percent) are responsible for 60–70 percent of domestic tax
     collections, while a very large number of smaller enterprises account for
     less than 5–10 percent of domestic tax collections. Within the EU, most of
     the taxpayers (65 per cent) are in the segment of micro firms[20]
     but with a turnover even not exceeding € 100.000 and contribute only 2
     percent of net VAT liabilities. Given the design of the VAT system, it is
     possible that these small firms will take more from the VAT system than
     what they pay in output tax (as part of the output tax will be deducted by
     larger firms).

Graph 2 – Segmentation of Tax
Payers and Revenue Collection: 
Source: World Bank quoted in
Risk-Based Tax Audits Approaches and Country Experiences World Bank report 2011
– Simon York p. 40.

 The
     stratification suggests a compliance problem in voluntary registrations. As said, the extremely
     low net VAT liability in this segment may indicate a loss-making
     activity in the segment or result from overvaluation of deductible VAT or
     undervaluation of turnover.  The detailed analysis of negative VAT
     liability for a selected number of Member States shows that deductible VAT
     compared to declared turnover is relatively high for voluntary
     registrations. It even results in a negative net VAT liability in a number
     of Member States (CY, DK, EE, EL, FR, HU, LT, LU, LV, SI, SK and UK) (See      Graph 3 below) as it amounts to a direct VAT subsidy to micro-firms.
     This may indicate a compliance problem. Additionally, having a higher
     registration threshold increases the risk that a significant number of
     taxpayers will choose to opt out of the VAT system, not for business
     reasons, but solely because they find themselves in a recurring VAT credit
     position. This risk is illustrated in Graph 3 below, which shows a
     trend of negative net VAT payable position for Member States where a
     threshold is in place (CY, DK, EE, EL, FR, HU, LT, LU, LV, SI, SK and UK).
     As a consequence, a drop in revenue may occur in case of higher
     registration threshold, with little possibility for the Member States to
     anticipate it, track it in a population with a wider range of turnovers
     and monitor it.

Graph 3 - Number
of voluntary registrations and contribution to the revenue for Member States
with thresholds

 A
     higher registration threshold does not significantly reduce the number of
     voluntary registrations, but may contribute to a drop in VAT revenue and
     to less visibility.
     There is no perfect correlation between the level of the threshold and the
     number of voluntary registrations, as depicted in Graph 4 below. On
     average, the segment of taxpayers whose declared turnover is below €
     100.000 contributes 2 per cent more to the total VAT revenue, compared to
     Member States with a threshold.

Graph 4 – Correlation between number of
volunteer registrations and the threshold
Conclusion

 In
     the EU, small and micro firms contribute only around 2% of VAT revenue. In particular, voluntary
     registrations below the registration threshold seems to indicate a
     compliance problem. It can even result in a negative net VAT liability in
     a number of Member States (DK, EE, EL, FR, HU, LT, SI, SK and UK).
 Member
     States should consider the desired threshold for mandatory registration
     and the VAT treatment of micro businesses need to be further examined. In setting a threshold
     for mandatory VAT registration, policy makers have to take into account
     the fact that businesses below the threshold may decide to register
     voluntarily to participate in the VAT system[21].

B.           
VAT
Registration Procedures
Overall Benchmarks

 Registration
     is transparent and taxpayers are well-informed about how, when and where
     they can register for VAT. Accurate and up to date information is
     available. There is access to services for taxpayers through helpdesks,
     online systems and/or call centres. Non-established taxpayers can easily
     get access to information through a website or a web portal and there is
     an exclusive contact point for these taxpayers. Requests for registration
     are dealt with one week. The registration process collects information
     enabling the tax administration to detect and stop fraud and consequently
     to limit substantially the level of fraud. From the start, the tax administration monitors VAT filing and payment
     compliance in connection with risky registrations, embracing early and
     on-going post-registration on-site visits. Deregistration
     procedures are effective to deregister immediately missing traders from
     the VAT system and to prevent VAT fraud at an early stage. The register is kept up
     to date and measures are taken to ensure the quality and reliability of
     the data in VIES. Tax Authorities and economic operators can rely on the
     validity of the VAT identification numbers in the VIES system. In cases of suspicious
     fraudulent intentions and when registration cannot be refused, the tax
     administrations take precautionary and additional security measures as a
     pre-requisite for registration.

Current Situation

 In
     most countries the registration process is transparent and taxpayers –
     including the non-established taxpayers - are well-informed about how,
     when and where they can register for VAT. In fact, only 3 Member States (BE,
     EL and LU) do not provide specific information on national and VIES
     registration to non-establish taxpayers. Almost all Member States (AT, BG,
     CY, CZ, DE, DK, EE, ES, FI, HU, IE, IT, LT, LV, MT, NL, PL, PT, RO, SE,
     SI, SK and UK) provide information (by means of a webpage, through a
     leaflet, etc.) on VAT registration and specify the requirement in foreign
     languages, English is the most common foreign language used. Nevertheless,
     a more user-friendly approach could be taken when information is provided
     in the language of neighbouring countries or to countries with which the
     country in question establish a more active economic partnership (for
     example, in the cases of FI and IT). A lot of efforts have been made in
     many Members States to provide information on their VAT system to
     non-established operators in English (AT, BG, CZ, DK, EE, ES, FR, HU, IT,
     LT, LU, LV, MT, NL, PL, SK, SE and UK). Nonetheless, when more specific
     and business-related issues emerge, the information given becomes scarcer
     and the person is re-directed at the existing webpages in their national
     language. Some Members States have specific offices dealing with
     non-established companies, where the staff is proficient in different
     languages. Still, and despite noticeable efforts made by many Member
     States on their website, it remains difficult to know whether certain
     businesses need to be registered or not and what the relevant obligations
     concerning it are..
 The
     registration process seeks a balance between facilitating trade and
     controlling the VAT system. Very few Member States have long deadlines for
     registration of taxable persons (weekly - BE, ES and PT; monthly – EL).
     The deadlines vary from immediate registration to a maximum of 30 days. In
     most cases, the registration process takes less than 10 days. This means
     that most Tax Authorities have a very tight deadline to perform
     pre-registration checks.
 The
     majority of Member States systematically cross-check the registration application
     against other sources of data. In addition to verifying the
     information provided in the application form, it is essential that
     supplementary information is collected from a range of accessible data
     bases. Generally, tax administrations verify information included in an
     application form through the national register of companies, as well as
     information available in internal databases, such as income tax returns,
     the social security register and customs declarations. EL, FR[22],
     IT and PT do not cross-check registration data. These checks are
     occasionally made in BE, CZ and PL.
 Most
     Member States focus on the identification of potential fictitious
     businesses at the pre-registration stage. A registration process under which
     the intended activity and the identity of the taxpayer are verified is
     essential to prevent frauds associated with fictitious businesses (also
     called “missing traders”). The registration process should collect
     information to enable the tax administration to detect and stop frauds associated
     with fictitious businesses at an early stage. This would limit
     substantially the level of fraud. Most Member States systematically rely
     on risk indicators in a pre-registration phase. On-site visits are not
     frequent. Few Member States systematically carry out pre-registration
     visits. Nevertheless, they do take place occasionally in the great
     majority of the Member States. FR, IT, LT and PT have limited or no
     pre-registration checks in place.
 Registration
     procedures rarely result in a rejection of the registration. In fact, a large number
     of Member States do not have available data in this respect. For the
     remaining Member States, in general, over the period 2009-2011, very few
     applications have been rejected, when compared to their respective total
     number of taxpayers (average of 0.16per cent[23]
     and maximum of 1.2per cent over this period). Graph 5 depicts the
     number of rejected registrations. More than half of the Member States (BE,
     BG, DE, DK, EE, ES, FR, HU, IE, LT, MT, PL, SE, SI and UK) keep a record
     of applicants for whom registration has been refused either for a national
     identification number or VIES identification number. These records are not
     always directly available to all registration offices.

Graph 5 – Rejected
registrations

 Post-registration monitoring programs for
     risky traders are implemented in half of the Member States. Modern Administrations
     monitor from the start VAT filing and payment compliance for risky
     registrations, including early analysis of the VAT returns and on-going
     post-registration on-site visits where needed. Some Administrations even
     set-up monitoring and visiting programs for a wider range of traders,
     which include intermediaries, brokers, main dealers, exporters and freight
     forwarders in high risk sectors. The main purpose of such programs is to
     gather as much information as possible on new players in the
     arena. Around
     half of the Member States systematically analyse the VAT return of new
     registrations. Not surprisingly, most of those Member States having put in
     place automatic cross checks of data in the initial phase of registration
     are also the ones proceeding to cross checks of the VAT returns with
     available data bases. Also half of the Members States, occasionally visit
     and audit companies at their premises. Only a few Member States (AT, LU
     and SK) have a systematic, albeit risk-based, visiting programme in place.
 There
     is often little information available on deregistration. Almost half of the
     Members States are not able to quantify the number of deregistrations following
     post registration checks, at least at central level. Moreover,
     around half of the Members States do not have data available on the
     percentage of deregistrations from VIES. For the others, the
     percentage varies from 0,1 per cent (IT) to 11,5 per cent (LV). The trend over the three previous years seems rather constant.
 In many Member States, deregistration procedures are
     too slow to stop VAT fraud at an early stage and are not very efficient as
     regards deregistering missing traders quickly from the VAT system. It
     is important to react quickly on detected frauds, in order to put an end
     to VAT fraud. Therefore, a short and rapid procedure should be in place to
     deregister or to cancel the VAT number. In case of suspicion of fraud, the
     minimum time required to deregister from a VIES number varies greatly from
     1 day to 134 days, the average being 13,4 days. Despite recent and
     real progress, quick deregistration still seems to be a problem in many
     Members States. The differences between the Member States are significant
     and often adequate legislation and administrative processes supporting
     deregistration are lacking.
 The
     interaction between registration for national purposes and for intra
     community trade differs across Member States. The vast majority of Member States
     provide identification for intra community trade together with the
     national registration for VAT purposes. The other Member States have
     separate registers. The percentage of registered taxpayers for intra
     community transactions goes from 6 per cent (BG) to almost 100 per cent
     (BE), with significant variations over the years in certain Member States,
     due to changes in the registration system (BE, IT and RO).
 Keeping
     the information available in the VIES system up-to-date, complete and
     accurate, can be improved for some Member States. Keeping proper and
     up-to-date records in VIES, as well as in the VIES Web version is a
     prerequisite to enhance legal certainty for legitimate business activities
     and mutual trust between tax authorities in the EU. As to the updating of
     the VIES data base, 5 Member States operate in real time (EE, IT, LU, PL
     and SI); the gross majority (18) update the VIES system daily; 3 weekly
     (BE, ES and PT) and only 1 monthly (EL). Most Members States have a
     hotline where taxpayers can report errors in VIES. Nevertheless, 3 Member
     States (ES, IT and PT) don’t have this facility.
 A
     total of 9 Member States use retroactive deregistration (CY, DK, EL, FR, IE, PL,
     PT, RO and UK). Nonetheless, only 6 ensure that the effective date of
     deletion from the system is visible (EL, FR, IE, PL, PT and RO) [24].

Conclusions

 In
     most countries the registration process is transparent and taxpayers –
     including the non-established taxpayers -  are well-informed of how, when
     and where they can register for VAT. Accurate and up-to-date information
     is available. Non-established taxpayers can easily get access to
     information. However, on more specific issues, the information given
     becomes scarcer in foreign languages.
 The
     focus on the pre-registration and deregistration process has increased
     significantly with the implementation of the Council Regulation 904/2010[25],
     however
     not all Member States have developed end-to-end processes for
     registration. An
     end-to-end process embraces not only pre-registration checks, but also a
     regular follow-up on the activities of the taxable person and
     deregistration as soon as the conditions for registration fail to be
     complied with[26], thus making VIES a more
     reliable database. 
 The
     number of deregistrations ex officio remains low and in many
     countries the deregistration procedures are slow. Quick deregistration
     still seems to be a problem due to the absence of adequate legislation and
     supporting administrative processes.
 Keeping
     the information available in the VIES system up-to-date, complete and
     accurate, may be improved for some Member States. In particular the long
     timeframes for updating the system and the retro-active deregistration in
     certain Member States may be problematic. In the latter case, according to
     the principle of transparency and legal certainty, the real date of
     deletion of the VAT number should be made visible to users in the VIES web
     version.

CHAPTER 3: Customs Procedure 42
Overall
Benchmarks

 Member
     States have put in place a system to enable checking of VAT identification
     numbers at the time of importation. This embraces an online access to the
     VIES database containing all valid VAT identification numbers in the EU
     database. Customs authorities systematically transmit data concerning
     importations using the Customs Procedure 42 to the tax administration for
     an efficient exchange of data. Importations using the Customs Procedure 42 are identified as an
     additional risk in the tax administration's risk analysis system. Results
     of this risk analysis are exchanged through Eurofisc[27]
     working field number 3 "Customs Procedure 4200".

Box 1. Customs 42 procedure
 CUSTOMS PROCEDURE 42 is the regime an importer uses in order to obtain a VAT exemption when the imported goods will be transported to another Member State. The VAT is due in the Member State of destination. 
 This procedure is commonly known as customs procedure 42 because in such cases the importer of the goods must indicate in box 37 of the Single Administrative Document (SAD) a code starting with the digits 42. When goods are re-imported, code 63 should be indicated instead. For the purposes of this report, references to customs procedure 42 include customs procedure 63. 
Current
Situation

 A
     significant number of Member States fail to systematically check both the
     VAT identification number of the importers and the VAT identification
     number of the customers. Although 24 Member States check the VAT identification
     numbers of the importers at the time of importation, only 17
     systematically also check the VAT identification numbers of customers
     acquiring the goods in the Member State of destination. As a result, a
     total of 9 Member States do not systematically check both of the above
     mentioned VAT identification numbers - the number of the importers and
     those of the customers (BE, BG, FR[28], HU, IE,
     LU, NL, PT and UK).
 In
     a number of Member States there is no system for exchanges of information
     between the Customs and the tax administration.  Once the information is
     made available to the Customs administration through box 44 of the SAD, it
     should be transmitted to the tax administration of the Member State of importation. At that time the tax administration can monitor whether the
     recapitulative statement has been filed by the importer or his fiscal
     representative and the transactions can be further monitored using the
     tools put at the disposal of Member States through the Regulation (EU) No
     904/2010. In EE and IE this exchange of information can be easily
     achieved, since these countries have a merged Customs and tax administration.
     In ES the information is also ensured since both Customs and tax
     administrations have one integrated database. There are still, however, at
     least 5 Member States where such system for the exchange of information is
     lacking (EL, IT, NL[29],
     PL and SK).
 Despite
     the high loss of VAT revenue due to abuse of the Customs 42 procedure at
     least five Member States indicated that they do not identify these imports
     as an additional risk in their domestic risk analysis system. Since 2011, a specific
     working field within Eurofisc has been set up to exchange rapidly
     information on possible fraudulent transactions or traders misusing the
     Customs Procedure 42. The information exchanged within this working
     field relates to suspicious transactions identified and resulting from a
     domestic risk analysis of these transactions. Currently, despite the high
     amount of VAT revenue that is lost following the misuse of the above
     mentioned Procedure (see Special Report of the ECA), 4 Member States (EE,
     FI, LU and MT) are not participating in this working field, whereas 2
     Member States (DE and PL[30])
     participate only as an observer.
 Several
     Member States use specific tools to avoid the misuse of the Customs
     Procedure 42. In
     several Member States specific tools, such as licenses (LU, MT, NL and SK)
     or guarantees (AT, DK, EE, ES, HU, IT, LU, MT, NL, RO and SK) are used in
     order to prevent the misuse of the Customs Procedure 42. For example, in
     AT, an electronic system automatically generates a recapitulative
     statement from the data contained in the SAD. In PL the use of the Customs
     Procedure 42 is dependent on the filing of the recapitulative statement.
     MT only releases the guarantee once the recapitulative statement is filed.
     Those Member States that use a guarantee only impose this in exceptional
     or limited cases.

Conclusions

 Not
     all Member States ensure that the validity of the VAT identification
     numbers listed in box 44 of the SAD are systematically checked at the time
     of importation.
     Those Member States that do not have yet done so - at least half of the
     Member States (BE, BG, DE, EE, HU, IE, IT, LU, LV, NL, PL, PT, RO, SE and
     SK) - should apply the necessary resources in order to guarantee automatic
     access to VIES to the customs administration. Moreover, not all Member
     States guarantee that all the information on importations using the
     Customs Procedure 42 is transmitted domestically to the tax
     administrations in order to ensure a proper follow up of the goods
     movement within the EU. This situation seems to persist despite previous
     recommendations on the matter – i.e. in FPG 29 of 2008, echoed by the
     European Court of Auditors in its Special Report No 13 of 2011[31],
     and also supported by the European Parliament and the Council.
 Member
     States should identify these transactions as additional risks in their
     domestic risk analysis systems. It is crucial that transactions
     misusing the Customs Procedure 42 are identified rapidly by all Member
     States and that the information is passed on quickly between them.
     Furthermore, in order to alert other Member States rapidly of fraudulent
     transactions discovered or traders systematically misusing the Customs
     Procedure 42, all Member States should actively participate in Eurofisc
     working field 3.
 The
     use of a license or guarantee may prove useful to prevent the misuse of
     the Customs Procedure 42, However, imposing an overall guarantee or license on
     all traders or fiscal representatives that intend to use the Customs
     Procedure 42 would be a disproportionate burden on honest business and
     jeopardise the smooth functioning of the internal market, taking away the
     flexibility and attraction of the simplification provide for by this
     procedure. Therefore, Member States imposing such a license or guarantee
     system should only target risky traders.

CHAPTER 4: Submitting VAT Returns (Filing) and Payment
Overall
Benchmarks

 Filing
     VAT returns is the first step (after registration) in the end-to-end
     process of establishing VAT liabilities. A disciplined and systematic
     approach is in place to monitor and enforce filing obligations and ensure
     on-time filing of returns. Highly automated business processes, embracing
     electronic filing of VAT returns and recapitulative VIES statements, are
     supported by taxpayer profiling tools to determine the most appropriate
     follow-up action for stop-filers (e.g., phone call, e-mail, text messages,
     demand notice, personal visit, default assessment or prosecution). VAT due
     and VAT refunds are paid timely. Interest is charged or paid automatically
     for late payments and refunds. Reasonable penalties support compliance
     with filing and payment obligations.

Current
Situation

 There
     are significant differences in the filing ratio (the number of returns
     received compared to the number of returns expected), across Member
     States.
     The median filing ratio for 25 Member States[32]
     is around 96 per cent. The best performing Member States have a ratio of
     VAT returns submitted reaching almost 100 per cent (DK, EE, NL, SE and
     SI). The lower end quartile is around 90 per cent. The filing ratio will
     depend, inter alia, on the efficiency of an automated and
     end-to-end filing and payment system, the interest and penalties schemes
     and the accuracy of the taxpayers register. In this context, IT is
     significantly under-performing (47.5 per cent) as many "active"
     VAT numbers are "dormant" and do not correspond to entities
     carrying out an economic activity and  do not submit VAT returns.
 On
     average, the results in terms of timely filing of the VAT returns could be
     improved.
     However, on average, those Member States with the best filing ratio have
     also the highest delays in filing time, which reflects the efforts made to
     collect the returns. Graph 6 depicts the delays and timely filing
     of VAT returns. VAT returns are filed for more than 97 per cent within the
     deadline in a minority of Member States (more specifically 5 Member
     States: BG, EL, IT, PT and SK).

Graph 6 – Delays and timely
filing of VAT returns

 Electronic
     filing is increasing, but not in line with reasonable expectations. Only a small majority of
     the Member States (see Graph 7 below) have appropriate legislation
     in place providing for a compulsory electronic filing of VAT returns. For
     the remaining Member States, so far, an option-based system is applicable.
     There is a positive trend in this respect: a significant increase in the
     effective percentage of electronic filing can be noted over the period
     2009-2011 (average progression for 2009/2010 of 49 per cent and of 22 per
     cent for 2010/2011). Nevertheless, the current figures are not satisfying
     since, in countries where the electronic filing is compulsory, the
     effective electronic filing reaches only 87 per cent on average.

Graph 7 – E-filing of VAT
returns[33]

 Progress
     could be made in 7 Member States on the development of an automatically
     filing and payment system for VAT returns. A central monitoring of the
     deadlines for filing and payment is in place in most Member States (See Graph
     8). However, modern and automated follow-up systems are lacking in a
     significant number of Member States. Automatic reminders are still not in
     place in 7 Member States (BG, ES, IT, LV, NL, PL and SK).
     Moreover, in 17 Member States (AT, BE, CY, CZ, DE, DK, FI, FR[34],
     HU, IE, LT, LU, MT, PT, RO, SE and SI) reminders are sent out through a
     written notification letter instead of more modern means of communication,
     such as an e-mails or a SMS. Only a few Member States have taxpayer
     profiling tools to determine the most appropriate action for stop-filers[35].

Graph 8 – Automated monitoring
of deadlines for filing and payment by an electronic system

 Interest
     and penalties for late filing and payment vary significantly across Member
     States and their efficiency remains to be proven. All Member States apply
     sanctions for late or non-filing. Most sanctions are for late payments -17
     Member States-(AT, CZ, DE, EE, EL, ES, FI, HU, IE, IT, LU, MT, NL, PT, SE,
     SK and UK). The range of penalty rate applicable
     appears to be broad, takes different forms (monthly fixed, yearly or
     periodic rate) and is not directly linked to the financial market rate.
     The current data do not provide any guarantee that the sanctions
     effectively impact and penalize the tax payers with overall cost that is
     higher than what would have been incurred as part of third-party financing
 Systematic
     and immediate estimated assessment in case of non-filing is not a common
     standard.
     10 Member States (BG, EE, ES, HU, LT, LV, PL, RO, SI and SK) do not
     calculate any estimated assessment in case of late filing and, for the
     remaining Member States, only 6 Member States (DE, FR, IE, MT, SE and UK)
     apply this assessment immediately. Graph 9 depicts the
     timeframe for assessment in case of late filing.

Graph 9 – Timeframe for
assessment in case of late filing

 The
     timeliness of VAT refunds has improved over the period 2009-2011 with some
     exceptions below 98 per cent (FR, HU, IE, IT, MT, RO and SI). In most Member States,
     the refund of VAT claim requests is subject to a deadline (22 Member
     States – AT, BE, BG, CZ, DE, DK, EE, EL, ES, FR, HU, IE, IT, LT, LV, MT,
     NL, PL, RO, SI, SK and UK), the standard effective period being between
     30-45 days (please refer to Graph 10 and 11 below). The
     deadlines, if applicable, are generally respected, up to at least 95 per
     cent in all Member States in 2011, except FR, IT, LV, MT and RO. Moreover,
     the VAT refund process can be suspended in case of suspicion of fraud for
     an undetermined period in a vast majority of the Member States (18 Member
     States – AT, BE, CZ, DE, DK, EE, ES, FI, FR, HU, IT, LT, LU, NL, PL, PT,
     SI and UK). There is little information on the amount of postponed refunds[36],
     but these amounts seems to be stable or improving, over the period
     2009-2011, for those Member States that disclosed the information (except
     for EL, FR, IT, NL and RO).

Graph 10 –Percentage of VAT
refund claim paid within the deadline
Graph 11 – Deadline for
payment of VAT refund claims under national law or procedures

 A
     majority of Member States do not automatically pay interest in case of
     late refunds. The
     number of Member States automatically paying interest in case of payment
     of VAT refunds after the deadline is unsatisfactory (12 Member States-CZ,
     DE, DK, EE, ES, FI, FR, HU, MT, PL, SI and SK), with 5 Member States per
     cent not applying interest (AT, CY, LU, NL and UK[37]).

Graph 12– Payment of interest
in case of late VAT refund
 

 Filing
     compliance is decreasing for recapitulative VIES statements. The overall percentage
     of recapitulative statements filed in time has decreased significantly
     between the period of 2009 and 2010[38] (-6 per
     cent) and has become stable since then to reach an average of 84 per cent
     which remains low.

Graph 13 – Percentage of VIES
recapitulative statements filed in time
 
Conclusions

 Although
     the median filing ratio in the EU is around 96 per cent, it can be
     significantly improved in a number of Member States. Modern and
     automatic end-to-end processes are often missing. A systematic and
     immediate estimated assessment in case of non-filing would contribute to a
     better filing ratio. The efficiency of interest and penalties schemes for
     late filing and payment needs further examination. The register of taxable
     persons is not being kept up to date may be another factor contributing to
     a low filing ratio. Electronic filing is increasing, but not in line with
     reasonable expectations. 
 The
     timeliness of VAT refund of VAT claims has improved over the period
     2009-2011.  The
     standard effective period is between 30-45 days. However, there are some
     Member States where timely VAT refunds remain problematic. And the
     majority of Member States do not pay automatically interest in case of
     late refunds.
 Filing
     compliance is decreasing for recapitulative VIES statements[39], The forthcoming
     Commission report on administrative cooperation in the field of VAT will
     examine this issue in further detail.

CHAPTER 5: VAT Collection and Recovery
Overall
Benchmarks

 The
     stock of tax debt is stable at less than 10 per cent of annual tax
     revenues. The backlogs of old debts are regularly reviewed for
     collectability and appropriate write-off policies are in place. A strong
     headquarters develops debt collection policies and strategies and monitors
     national debt collection performance. Debt collection operations are
     consolidated into a small number of offices and conducted by a full time
     work force of specialized collection staff. The function is highly
     automated and includes: (i) computer generated notifications, reminders
     and warrants; (ii) automatic identification of assets based on third party
     information and (iii) automatic offsetting of tax credit entitlements
     against outstanding debts. Debtor profiling tools assist in targeting the
     most effective means of collecting overdue payments. Out-bound telephone
     call centres make early contact with new debtors. The administration has a
     structured and transparent approach for instalments schemes and there is
     an automatic identification system of assets based on third party
     information and debtor profiling tools. A holistic government approach is
     taken to coordinating collection of tax and social security contribution
     debts.

Current
Situation

 The
     stock of arrears is high and increasing in most Member States. The median for the stock
     of debts is 11 to 13 per cent of annual tax revenues. However, the stock
     of VAT debt at the end of the year in terms of percentage of annual
     revenue is reaching 19 to 23 per cent on average over the period of
     2009-2011. Considering the current financial and economic crisis, the
     stock of VAT debt has increased in most of the Member States by an average
     of 9 per cent. Only 6 Member States have reduced their stock by more than
     4 per cent (AT, BE, HU, LU, SE and UK). This has not offset the position
     of a few Member States which have significantly increased the same stock
     by 19 per cent or more, particularly CY and MT (19 per cent), EL (21 per
     cent), LV (27 per cent), SK (31 per cent) and SI (91 per cent). The growth
     in VAT arrears is of concern, but can at least be partly explained by the
     recession. Graphs 14 and 15 depict the situation and
     evolution of the arrears inventory from 2009 onwards.

Graph 14 – Stock of VAT debt
at the end of the year
Graph 15 – Stock of VAT debt
at the end of the year (growth)[40]

 The
     absence of debt write-off in a number of Member States gives a distorted
     picture of the stock of tax debts that are truly collectible. The level of write-offs
     is low and even close to zero in BG, CY, EL, FI and MT. Without an
     on-going write-off programme, the tax administration risks wasting
     valuable resources pursuing uncollectible amounts as attention is diverted
     from collectible debt. Debts proven uncollectible at a reasonable cost
     should be subject to a flexible write off procedure. Graph 16
     depicts the position of the VAT write-offs in most Member States over the
     period 2009-2011.

Graph
16 – Value of the VAT write-offs in percentage of vat revenue

 In
     a significant number of Member States the debt collection function is not
     managed from an end-to-end perspective. A coherent approach is required
     which manages the debt collection process from the time the debt is
     established until it is extinguished. Many Member States do not have a
     central or local real-time system to report on the stock of VAT debts (5
     Member States –DE, EL, PL, SK, UK- as regards a per-debtor reporting and 7
     Member States –DE, EL, HU, PL, SE, SK, UK as a whole). Only 3 Member
     States (ES, IT and PT) have a fully integrated recovery process which is
     supported by an automatic identification of assets based on internal or
     third party information. While 10 Member States (BE, BG, CZ, DK, FI, HU,
     IE, LT, SE and SI) have partially integrated such a process.

Graph
17 – Automated identification of asset system supporting the recovery process
and based on third party information

 There
     is a clear trend towards non-sequential debt collection processes. About half of all Member
     States  use automatic debtors profiling tools in order to
     differentiate the recovery process between low, medium and high
     risk debts (AT, BE, BG, DE, ES, FR, HU, IE, LT, LU, LV, PT, SE and UK).
     Moreover, in 19 Member States (AT, BG, CY, DE, DK, EE, EL, FI, HU, IE, LT,
     LU, LV, MT, NL, PL, PT, SE and SI) there is systematic special procedure
     for new debtors, involving in many cases outbound call centres. Graph
     18 depicts the use of non-sequential debt collection processes.

Graph
18 – Distinction between low, medium and high risk debts

 The
     policy on instalments schemes is diverse. A small number of Member States do
     not apply instalments schemes for VAT. 4 Member States most frequently
     apply settlement arrangements for periods of less than 6 months (CY, LU,
     SK and UK). 12 Member States apply settlement arrangements for 6 to 12
     months (BE, CZ, DK, EE, ES, HU, LV, MT, NL, PT, SE and SI) and 5 Member
     States for 12 to 24 months (AT, FI, FR, IE and LT). Within the
     scope of this exercise, the correlation with the performances of the
     Member States in terms of management of the VAT debt is difficult to
     establish. Nevertheless, the Member States who perform well in this
     respect have generally a 6 month deadline with a maximum of 12 months (HU,
     NL and SI). Table 3 below depicts the four categories in which the
     Member States can be ranked when considering the value of their instalment
     arrangements compared to their outstanding VAT debts and can be correlated
     with the Graph 19 describing the length of the instalment periods.

Table
3 - Value of instalment arrangements in
percentage of total outstanding VAT debts at year end – average performance of
Member States group over 2009-2011
 1st Group || CY, CZ, DK, ES || 21% 
 2nd Group || NL, IE, HU, SI || 9% 
 3rd Group || AT, BE, EE, PL, LV, LT, MT || 4% 
 4th Group || BG, DE, UK || 0.21% 
Graph
19 – Possible instalment procedures[41]

 Little
     use is made of offsetting arrears against tax credits. Only 13 Member States
     (AT, CY, CZ, ES, FI, HU, IE, LT, PL, PT, SE, SI and UK) offset only
     automatically tax VAT refunds against outstanding VAT debts and 7 Member
     States (AT, ES, FI, HU, IE, SE and SI) offset only automatically VAT
     credit entitlements against outstanding other taxes.
 The
     percentage of enforced collection in relation to the total collection are
     heterogeneous.
     One explanation is that the legal definition of enforceable debt differs
     amongst the Member States which has a significant impact on practices and
     data. The average performance is 10,79 per cent nonetheless.

Graph
20 – Percentage of enforced collection in relation to total collection
 

 There
     is a trend to combine tax and social security contribution debts offering
     significant economies of scale. Tax and social security claims are
     recovered by the same authorities in the following Member States: BG, DK,
     EE, FI, LV, NL, RO, SE, SI, and the UK.

Conclusions

 There
     is a growth in VAT arrears which can be, at least partly, explained by the
     recession.
     The increase in the stock of debts is in particular a concern in EL, ES,
     SI and SK.
 The
     absence of write-off procedures in many countries makes it difficult to
     compare the level of collectable debts. Debts proven uncollectible at a
     reasonable cost should be subject to a flexible write-off procedure.
 Efforts
     have been made to increase the efficiency of the debt collection. There is a clear trend
     towards non-sequential debt collection processes as well to combine tax
     and social security contribution debts. Around half of the Member States
     (BE, BG, CZ, DK, ES, FI, HU, IE, IT, LT, PT, SE and SI) have implemented
     fully or partly integrated recovery processes supported by automatic
     identification of assets based on internal or third party information.

CHAPTER 6: VAT Audit and Investigation
Overall
Benchmarks

 The
     audit programme includes a range of audit approaches and a risk-based
     enforcement plan that, together with taxpayer services, provides a
     balanced approach to promoting voluntary compliance. A risk based
     management system should be in place for the selection of taxpayers to be
     audited. The existence of such risk management system allows allocating
     audit resources according to the taxpayers' risk. The tax administration
     has an appropriate number of staff with adequate training. The audit
     managers and staff are well trained and display a high level of
     professionalism and integrity in their dealings with taxpayers.

There is a separation of duties
throughout the audit process with checks and balances in place to minimize
opportunities for corrupt dealings. VAT audit results rely on sound evidence
that is not disputed in an administrative or judicial appeal phase.
An annual operational plan is developed,
implemented, and monitored to achieve a suitable level of operational
performance (e.g., audit coverage of key taxpayer segments productivity of
audit staff and revenue outcomes). Auditors have access to guidance on tax
technical and procedural topics to ensure consistent and equitable decisions in
the field and are equipped with modern audit tools (laptops, analytical
software, etc.).
Current
Situation

 The
     majority of Member States have mentioned a risk-based strategy decided
     centrally as a way of selection of taxpayers to be audited.
     Nevertheless, there are 5 Member States that do not have a risk-based
     strategy decided centrally as a way of selection of the taxpayers to be
     audited (EL, ES, LU, PT and RO) and the selection is partly made by the
     central headquarters and partly locally. Altogether 7 out of the 27 Member
     States (AT, DE, IE, IT, FI, PL and SI) have an express obligation to audit
     some taxpayers for all years. Even assuming that this obligation is only
     valid for large taxpayers, it prevents Member States from having the
     flexibility to allocate audit resources to taxpayers that represent higher
     risk.
 There
     are huge differences in EU Member States regarding the percentage of
     taxpayers that are subject to field audits. The median is around 2 per cent,
     but the average is around 6 per cent. The average is influenced by a group
     of Member States that have field audits to more than 10 per cent of the
     taxpayers (DE, HU, LT and MT).

Graph 21 – Percentage of
taxpayers subject to field audits (2011)

 There
     are also big differences in the percentage of VAT refunds that are subject
     to field audits. While
     13 Member States (BE, BG, DK, EE, ES, FR, LT, LV, NL, SE, SI, SK and UK)
     have restricted field audits to less than 4 per cent of VAT refund
     requests, with some having 0.2 per cent or less (EE, LT, NL, SE and SI),
     there are 2 Member States (CY and HU) where more than 20 per cent of the
     VAT refunds requests are subject to field audits and in France 7 per cent
     of these requests are subject to in-depth audits. 
 The
     differences in approach amongst Member States is also visible in the
     dichotomy between full audit/targeted audit. Of the 22 Member States that
     mentioned the percentage of full audits (AT, BE, BG, CY, DK, EE, ES, FI,
     FR, HU, IE, IT, LT, LU, LV, MT, PT, RO, SE, SI, SK and UK), 6 (BE, BG, CY,
     DK, FI and FR) have more than 80 per cent in all years, while the average
     (including these Member States) is close to 50 per cent.

Graph 22 – Percentage of target
audits

 The
     median of additional VAT assessed as a result of controls is around 3,7
     per cent,
     but this value is significantly higher in some Member States. The results
     confirm the limited impact of audit in addressing tax fraud and evasion
     and the need for it to be seen as one of many tools to address this issue.

Graph 23 – Amount of
additional VAT assessed as a result of the controls as percentage of the total
VAT revenues

 Five
     Member States (CY, DK, FI, LU and MT) have mentioned that they do not have
     performance indicators to assess the effectiveness of their audits. With a large number of
     staff involved in audit tasks, tax administrations have to regularly
     assess the effectiveness of their audit work, in order to allocate
     resources accordingly.
 A
     large majority of Member States indicated that taxpayers must provide data
     in computer-based systems during tax audits. With the large number of
     transactions that even a medium-sized company makes and with electronic
     invoicing gaining importance, it is impossible for tax auditors to carry
     out their work efficiently with old-fashioned paper-based audits. It is
     natural that tax auditors should have the means to analyse data that is
     provided in computer-based systems. Nevertheless, most Member States do
     not have the obligation for taxpayers to have a Standard Audit File, which
     could represent additional gains in terms of efficiency and effectiveness
     of audit work.
 Most
     Member States have access to a wide range of categories of third party
     information, but not always in an automated manner. Effective audit work
     should not rely solely on the data collected from the taxpayer, but
     auditors should prepare in advance their audits by having access to
     relevant third party information. The level of access to third party information
     for audit work varies within the EU Member States, but there is a clear
     trend to provide auditors with more information.  For some categories of
     information (e.g. real estate register and vehicle register) most Member
     States have automatic access to such information, while for other
     categories (e.g. social security and financial institutions) most tax
     administrations need to make a request before access to the information is
     allowed. The fact that important information is only available on request may
     prevent it from being obtained in time to be used during the audit and may
     as well discourage auditors from requesting it simply to avoid the
     additional burden.
 The
     majority of Member States frequently request information from other Member
     States.
     In a globalised economy, in which many companies have transactions with
     economic operators established in other countries, it is essential that
     auditors can get information from other Member States to assess correctly
     the tax situation of the companies being audited. However, though Member
     States do use this possibility frequently, there are still significant
     obstacles (legal, speed, quality of reply and language) that hamper the
     effectiveness of this tool.
 All
     Member States have indicated that there is a review, either systematic or
     occasional, of audit reports. This is important to ensure the level of
     professionalism that is expected from audit work and to minimise the
     occurrence of corruption, guaranteeing at the same time that audit reports
     rely on sound evidence avoiding unnecessary disputes with taxpayers.
 It
     is important to ensure that the auditors have adequate training and have
     the technical knowledge to produce high quality work. The median of training
     days per auditor is 5, with RO mentioned 30 days, which would mean that an
     auditor would spend on average close to 15 per cent of its working time on
     training.

Graph 24 – Annual Training
Days per Auditor

 The
     large majority of Member States provide e-audit training, divided almost equally
     between the group that provides this training to all auditors and those
     who provide it only to e-audit units. Only two Member States (IT and MT)
     do not provide any e-audit training. As all Member States mentioned the
     obligation for taxpayers to provide data in computer-based systems, it is
     important that tax auditors have the possibility of handling the data in
     an effective way, which requires the use of e-audit tools.

Graph 25 – Specific e-auditing
training

 The
     majority of Member States have specialized VAT anti-fraud units. Eight Member States
     still lack such units (AT, CZ, EE, EL, FI, HU, LV, RO and SI). The
     investigation of potential fraud cases requires a set of skills completely
     different from audit work. This task needs to be performed by trained
     investigators integrated in teams that are able to analyse fraud trends
     and identify early signs of fraudulent activity.

Graph 26 – Specialized VAT
anti-fraud units
Conclusions

 The
     majority of Member States apply a risk-based strategy to the selection of
     taxpayers to be audited. However, 7 Member States (AT, DE, FI, IE, IT, PL and
     SI) still keep the obligation to audit some taxpayers for all years. This
     obligation prevents an optimal allocation of audit resources according to
     risk and prevents tax administrations from rewarding companies that
     voluntary comply with their tax obligations with less frequent audits.
 There
     has been a trend for the increase of number of targeted audits. However, in some Member
     States full audits are still the norm which prevents more focused and efficient
     audits making full use of the third party information collected before the
     audit procedure.
 E-auditing
     is well developed in many Member States. A large majority of Member States
     have the obligation for taxpayers to provide data in computer-based systems
     during tax audits and 24 Member States (AT, BE, BG, CY, CZ, DK, EE, EL,
     ES, FI, FR, HU, IE, LT, LU, LV, NL, PL, PT, RO SE, SI, SK and UK) provide
     e-audit training to their auditors. However, only a limited number of
     Member States have already introduced the obligation for a Standard Audit
     File in their legislation, which would result in efficiency gains in audit
     work.
 The
     use of third-party information for audit purposes is widespread. The majority of Member
     States make use of third party information to prepare their tax audits and
     make regular use of administrative cooperation requests for information
     from other Member States. Nevertheless, Member States identify significant
     obstacles that limit the usefulness of administrative cooperation (legal,
     speed, quality of reply and language).
 The
     majority of Member States have created VAT anti-fraud units with
     specialised investigators. Only 8 member States (AT, CZ, EE, EL, FI, HU, LV, RO and SI) do not tackle VAT fraud in a distinct and autonomous way.

CHAPTER 7: Tax Dispute Resolution System
Overall
Benchmarks

 The
     dispute resolution process helps build community confidence in the tax
     system and reduces collection risks by ensuring the quick and equitable
     resolution of disputes. In an ideal situation a taxpayer can appeal
     against decisions by the tax administration in a codified, transparent,
     fast and low-cost tax dispute resolution system. This system includes a
     fast and efficient administrative appeal process, independent of the
     original decision-maker (usually an auditor), before addressing the
     dispute to the Courts. This administrative appeal process must ensure that
     only cases of legislative substance are submitted to the judicial appeal
     process. Payment of the disputed tax is required when a request for
     judicial review is made and there is minimal backlog of unheard cases.
     Therefore, there are specialized units and officers specially trained in
     dealing with tax disputes in or outside the tax administration. The tax
     administration is able to manage the tax dispute resolution system based
     on management information data. These data allow the tax administration if
     needed to adjust their practices.

Current
Situation 

 Most
     Member States have a compulsory administrative dispute resolution process.
     In the
     case of disagreements with a final decision of the tax administration, the
     majority of Member States (14 Member States)  replied that the first stage
     in the tax dispute resolution process is an obligatory administrative
     appeal procedure within the tax administration. Other 5 Member States (DK,
     EL, ES, MT and SI) have an obligatory administrative procedure outside the
     tax administration (for instance, an appeal body at the Ministry of
     Finance or an administrative committee). In 7 Member States (BE, BG, CY,
     EE, EL, FI and IT) the dispute is directly dealt by the Court of First
     Instance. 4 Member States (BG, EL, IT and UK) offer the taxpayer a choice
     resulting in a dispute resolution system with multiple entries. Graph
     27 depicts the first step of the dispute resolution process.

Graph
27 – First stage of the dispute resolution process

 Only
     a minority of Member States do not have deadlines for decisions in the
     administrative appeal process. Most Member States (21 Member
     states- AT, BG, CY, CZ, DE, DK, EE, EL, ES, FR, HU, IT, LT, LV, NL, PL,
     PT, SE, SI, SK and UK) apply deadlines for decisions in the administrative
     appeal process. These deadlines vary between 2 months (10 Member
     States-DE, EE, HU, IT, LT, LV, NL PL, SE, SI and SK[42]),
     and one year (10 Member States-AT, BG, CY, CZ, DK, EL, ES, FR, IT and PT).
     In a minority of Member States no deadline is applied (6 Member States -
     BE, FI, IE, LU, MT and RO).

Graph 28 – Applicable
deadlines in Administrative Appeals

 In
     the majority of the Member States the disputed amounts remain fully or
     partly collectable during the appeal process. There are two main approaches
     towards the consequences of VAT collection in case of a VAT dispute, i.e.,
     no postponement of the payment of VAT to the State budget (14 Member
     States-BG, DE, DK, EE, EL, ES[43],
     FI, FR[44],
     HU, LU, PL, RO, SI and UK[45])
     or postponement only of the disputed amount of VAT (12 Member States –AT,
     BE, CY, CZ, DE, IE, LT, LV, MT, NL, SE and SK). Only few Member
     States (3 in both cases) postpone a part of the disputed amount of VAT
     (DE, EL and IT) or all the assessed VAT (EL, PL[46]
     and PT).
 The
     percentage of decisions fully or partly in favour of the taxpayer varies
     significantly across Member States. The average percentage of decisions
     in the first stage of the appeal process fully in favour of the taxpayer
     ranges differs between 1 and 61 per cent. For most Member States, the
     percentage is between 11 and 28 per cent over 2009-2011. Taking into
     account the second stage[47]
     of the appeal process the percentage increases by a few points. Graphs 29 to 32 depict the
     number of decisions fully or partly in favour of the taxpayer,
     respectively at first and second stages.

Graph 29 – Percentage of decisions
in favour of the tax payer after first stage compared to the number of total
appeals
Graph 30 –Percentage of
decisions in favour of the tax payer after second stage compared to the number
of total appeals
Graph 31 – Percentage of partially
favorable first stage of decisions compared to the number of total appeals
Graph 32 - Percentage of partially
favorable second stage of decisions compared to the number of total appeals

 In
     general the dispute resolution process is not managed from an end-to-end
     perspective. The
     collection of management information (data) is not a common practice. Several
     Member States do not have any information about their tax dispute
     resolution process. Others have only fragmented data available.
 There
     are significant differences in the efficiency of the dispute resolution in
     the Member States.
     The number of administrative appeals varies significantly amongst Member
     States. The number of administrative appeals varies between 7.039,00 and
     10.997,00 on average, per Member State. This number, if compared to the
     VAT taxpayer population, equals 1,76 per cent on average with a maximum of
     10 per cent (AT) (see Graph 33 below). Also the number of pending
     appeals varies significantly amongst Member States (see Graph 34
     below), with, mostly, no direct correlation to the number of appeals. This
     suggests large differences in the efficiency of the dispute resolution
     process in Member states.

Graph 33 –Percentage of
Administrative Appeals in 2011 compared to VATable persons
Graph
34 – Percentage of Pending Appeals compared to
VATable persons
Conclusions:

 The
     organisation of the procedure differs, but most Member States have a
     compulsory administrative dispute resolution process. Such an approach
     focuses on the efficiency of the appeal procedure. It helps to clarify
     fact-based disputes, where the judicial phase will rather focus on the
     legal aspects and the quality of the appeal procedures. It contributes to
     reducing the number and length of appeals. Some countries have a separate
     tax tribunal as a first step in the judicial process as an appropriate
     alternative to the administrative phase. This confirms a trend to
     guarantee both the efficiency (number and duration) and the quality of the
     appeal procedure.
 Most
     Member States have deadlines for the administrative appeal procedure. This speeds up the
     dispute resolution and again confirms the focus on the efficiency of the
     procedures. 
 The
     number of appeal varies but is high in certain Member States as well as the number of appeals in favour of the tax payer. Where possible, potential
     sources of tax disputes should be eliminated and tax administrations
     should work to establish an environment that minimises unnecessary
     disputes. This requires preventive measures such as, inter alia, clear and
     well-drafted laws and regulations, effective taxpayers services, binding
     rulings and high quality audits.
 In
     half of the Member States the disputed amounts remain full or partly
     collectable during the appeal process. This is good practice that
     safeguards revenue and avoids abuse of the appeal procedures.
 Many
     Member States do not collect sufficient information on their tax dispute
     resolution process. The
     collection of management information on disputes is not a common practice.
     All aspects of the appeal process should be monitored, including through
     the use of key performance indications. Increasing the number and the
     speed of the dispute resolution process requires an end-to-end approach,
     whereby the outcome of the appeals feeds into dispute preventive measures
     and gives rise to adjustments to the tax payers' services, clarifications
     of laws and regulations, etc.

CHAPTER 8: VAT Compliance
Overall
Benchmarks

 The
     tax administrations follow a Compliance Risk Management Strategy,
     intervening to promote compliance and preventing non-compliance based on
     the knowledge of taxpayer behaviour. There is a risk based segmentation of
     taxpayers, allowing tax administration to interact with taxpayers
     according to their risk pattern. Tax administrations provide appropriate
     taxpayer services, making it easier for taxpayers that want to comply to
     fulfil their tax obligations and enhance voluntary compliance by
     influencing behaviour of taxpayers.

Current
Situation

 There
     is a trend in most Member States to develop a Compliance Risk Management
     Strategy approach. These strategies segment taxpayers according to
     their risk profile and act accordingly to the specific risks of the
     segment. A majority of Member States indicated that they have different
     compliance strategies according to taxpayer segment, mainly based on
     business size (24 Member States –AT, BE, BG, CY, CZ, DK, EE, EL, ES, FI,
     FR, HU, IE, IT, LT, LU, LV, MT, NL, PT, SE, SI, SK and UK), economic
     activity (17 Member States –BE, BG, CY, CZ, IE, EL, ES, FI, FR, HU, IT,
     LU, LV, NL, PT, SI and UK) and compliance level (16 Member States). A
     description of risks for different segments of taxpayers is also developed
     in 18 Member States (AT, BE, BG, CZ, EE, EL, ES, FR, HU, IE, IT, LT, LV,
     PL, SE, SI, SK and UK) and 16 Member States (BE, BG, CZ, DE, DK, EE, EL,
     HU, IE, LT, LV, PT, SE, SI, SK and UK) indicate that they use the results
     of audits to update their risk model. However, ultimately, only 4 Member
     States (EL, FR, HU and IT) could effectively indicate the percentage of
     taxpayers falling within the different layers of the compliance pyramid.

Graph
35 – Description of risks developed for
different segment of taxpayers
Without a clear segmentation of taxpayers
into risk categories it is not clear how tax administrations can adjust their
interaction with taxpayers. Furthermore, the effectiveness of the Risk
Management Strategy in many Member States needs to be confirmed.

 The
     large majority of Member States do not have an estimate of the VAT gap and are unable to use
     the evolution of this indicator as a measure of the effectiveness of their
     tax administrations and their compliance risk management strategies. Only
     5 Member States presented estimates of the VAT gap (EE, IT, PL, SK and UK).
 Member
     States apply different approaches to tackle this VAT gap, at different
     levels. The
     majority of Member States resort to information initiatives and the
     development of an information strategy (see Graph 36 below). Other
     Member States (18 –BE, BG, CZ, DE, DK, EE, EL, ES, FR, HU, IE, LT, LV, PT, SE, SI, SK and UK), use the systematic results of audit to update their risk
     model. Most Member States also give taxpayers the opportunity to request a
     binding ruling (18 Member States – BE, CY, CZ, DE, DK, ES, FI, FR, HU, IT,
     LT, LV, MT, PL, PT, SE, SI and UK), whereas only a small majority of
     Member States (15 - AT, BE, CY, DE, DK, FR, IE, IT, LV, MT, NL, PL, SI, SK
     and UK) offer voluntary disclosure arrangements.

Graph
36 – Information initiatives undertaken by the
member states in the recent years

 However,
     the measurement of the impact on compliance of the various approaches to
     tackle the VAT gap can be significantly improved. Despite the development
     of new approaches to tackle the VAT gap in the recent years, the large
     majority of the Member States do not measure the impact on voluntary
     compliance of the various elements of tax policy. Significant efforts are,
     therefore, required to improve the monitoring and assessment of the
     performance.

Graph 37 – Measurement of impact on
voluntary compliance of the various elements of tax policy

 Use
     of third-party information is crucial to developing a complete view of the
     risk of the taxpayers and to improve debt collection. There is a variety of
     sources made available to the tax authorities (see Graph 38 below)
     and, also, a trend in making increased use of data/information from third
     party information sources. This can nevertheless be significantly improved
     in particular for debt collection and tax payer segmentation.

Graph
38 – Use of third party information
Conclusions

 There
     is a trend to develop and implement a compliance risk management strategy
     in most Member States. However, in many Member States the risk management
     strategy have to be further developed. 
 More
     work could be done on the estimation of the VAT gap. Only five Member
     States produce estimates of the VAT gaps. The objective of a tax administration
     is to decrease the gap between the taxes due and the taxes collected.
     Without the knowledge of the evolution of this indicator, it is not
     possible to evaluate the effectiveness of the measures to tackle tax fraud
     and evasion.  
 The
     measurement of the impact of the different components of the compliance
     strategy can be improved. Again only eight Member States (AT, BG, EE, EL, HU, LT,
     LV and UK) assess the outcome of the different measures implemented to
     promote of voluntary compliance, in order to identify best strategies to
     influence behaviour of taxpayers to voluntarily comply with their tax
     obligations.
 There
     is a trend in making increased use of data/information from third party
     information sources. This
     can nevertheless be significantly improved in particular for debt
     collection and tax payer segmentation.
 RECOMMENDATIONS 
 In
     most fields a majority of tax administrations has implemented best
     practices. The following main recommendations are addressed to a number of
     Member States where improvements in the field of VAT collection and
     control can be made.

VAT Identification,
Registration and Deregistration

 The
     compliance of voluntary registrations needs to further examined, in
     particular for those Member States where the segment has a negative VAT
     liability. (DK,
     EE, EL, FR, HU, LT, SI, SK and UK)
 Cross-check
     registration data with internal data sources and systematically compare
     with third-party information sources. (BG, CY, DE, DK, EL, IE, MT, PT, RO
     and SK)
 Issue
     clear instructions, guidelines and manuals for risk assessment at
     registration and on-site pre-registration visits. (BE, EL and LU)
 Implement
     post registration monitoring programmes for risky traders. (BG, CY, DE DK,
     EL, IE, LT, PT, RO and SK)
 Implement
     a fast-track procedure to deregister missing traders from the VAT system.
     (AT, CY, EL, HU, IE, PT and RO)
 Keep
     the information available in the VIES system up-to-date, complete and
     accurate. (BE, EL ES and PT)

Customs Procedure 42

 Ensure
     that at least the validity of the VAT identification numbers listed in box
     44 of the SAD are systematically checked at the time of importation.(BE,
     BG, DE, EE, HU, IE, IT, LU, LV, NL, PL, PT, RO, SE, SK and UK)
 Guarantee
     automatic access to VIES to Customs Administration and, vice versa,
     ensure that all information on importations using the Customs Procedure 42
     is transmitted domestically to the Tax Administrations. (EL, IT, NL and
     PL)
 Identify
     Customs Procedure 42 as an additional risk in domestic risk analysis
     systems and reinforce the exchange of information on transactions misusing
     the procedure, inter alia by active participation in Eurofisc working
     field nr. 3. (DE, DK, NL, PL and RO)
 Consider
     using licences or guarantees to prevent the misuse of the Customs
     Procedure 42, targeted at risky traders. (BE, BG, CY, CZ, DE, EL, FI, FR,
     IE, LT, LV, PL, PT, SE, SI and UK)

Submitting VAT Returns (Filing) and
Payment

 Introduce modern and automatic
     end-to-end processes for filing and payment, including automated reminders
     by SMS or e-mail.(AT, BE, BG, CY, CZ, DE, ES, FI, FR, IT, LU, LV, MT, NL,
     PL, PT, RO, SE, SI and SK)
 Investigate
     the efficiency of interest and penalties schemes for late filing and
     payment. ALL
 Provide
     for compulsory electronic filing. (CY, EE, FI, HU, LT, MT, PL, RO, SE and SK)
 Consider immediate and automated
     estimated assessments in case of non-filing (AT, BE, BG, CZ, DK, EE, EL,
     ES, HU, IT, LT, LV, LU, PL, SI and SK)
 Introduce
     a standard effective period for VAT refund being between at least between
     30-45 days.(AT, BE, CY, EL, ES, FI, IT, LU, MT and SE)
 Pay
     interest in case of late refunds.(AT, CY, LU, NL and UK)

VAT Collection and Recovery

 Implement best practices as regards
     write offs of debts proven uncollectible at a
     reasonable cost.(BG, CY, EE, EL, FI, IE, MT and SK)
 Reconsider policies in term of late
     payment interest, instalment length in line with best practice.(AT, BG,
     DE, FI, FR, IE, IT, LT, PL and RO)
 Implement
     non-sequential debt collection processes.(CY, CZ, DK, EE, EL, FI, IT, MT,
     NL, PL, RO, SI and SK)
 Combine
     collection of tax and social security contribution debts. (AT, BE, CY, CZ,
     DE EL, ES, FR, HU, IE, IT, LT, LU, MT, PL, PT and SK)
 Implement
     integrated recovery processes supported by automatic identification of
     assets based on internal or third party information. (AT, CY, DE, EE, EL, LU, LV, MT, NL,
     PL, RO, SK and UK)

VAT Audit and Investigation

 Abolish
     the obligation to audit some taxpayers for all years and apply risk-based
     systems.(AT, DE, FI, IT, NL, PL and SI)
 A
     risk-based selection of taxpayers to be audited should also highlight
     major risk areas and full audits should not be the norm.(BE, BG, CY, DK,
     FI and FR)
 Provide
     basic e-audit skills to all auditors and promote the use of e-audit tools;
     the number of transactions and the use of electronic invoicing preventing
     the effectiveness of paper-based audits.(IT and MT)
 Establish
     specialized VAT anti-fraud units; the requirements for staff dealing with
     potential fraudsters are totally different from those of regular tax
     auditors who deal with taxpayers who try to comply with their obligations.(AT,
     CZ, EE, EL, FI, HU, LV, RO and SI)

Tax Dispute Resolution 

 Consider
     a compulsory independent administrative dispute resolution process and
     avoid multiple entries for dispute resolution.(BE, BG, CY, EE, EL, FI and
     IT)
 Consider
     deadlines for the administrative appeal procedure.(BE, FI, IE, LU, MT and
     RO)
 Eliminate
     potential sources of tax disputes and work to establish an environment
     that minimises unnecessary disputes.(AT, BG, CY, HU, IT, LU, LV, NL, RO and SK)
 Ensure
     that the disputed amounts remain fully or partly collectable during the
     appeal process.(EL, PL and PT)
 Collect
     management information on disputes and monitor all aspects of the appeal
     process, including with key performance indications.(BE, BG, CZ, DE, EL,
     FI, IE, FI, IT, LU, MT, NL, PL, PT, SE and SK)

VAT Compliance

 Implement
     a compliance risk management strategy, segment taxpayers according to
     their risk profile and act accordingly to the specific risks of the
     segment using a mix of tools.(CY, DE, DK, FI, LU, MT and NL)
 Produce
     reliable estimates of the VAT gaps as a mean of evaluating the
     effectiveness of the measures to tackle tax fraud and evasion.(AT, BE, BG,
     CY, CZ, DE, DK, EL, ES, FI, FR, HU, IE, LT, LU, LV, MT, NL, PT, RO, SE and
     SI)
 Assess
     the outcome of the different measures implemented to promote of voluntary
     compliance, in order to identify the best strategies to influence the
     behaviour of taxpayers to voluntarily comply with their obligations.(BE,
     CY, CZ, DE, DK, FI, FR, IE, IT, LU, MT, NL, PL, PT, SE, SI and SK)
 Further
     develop the use of third party information for audit selection, taxpayer
     segmentation and debt collection. ALL

************
[1]               Source:
EUROSTAT
[2]              VAT
theoretical liability is estimated by identifying the categories of expenditure
that give rise to irrecoverable VAT and combining these with the appropriate
VAT rates. The VAT gap is not a measure of VAT fraud and includes e.g. VAT not
paid as a result of legitimate tax avoidance measures or VAT that is not
collected due to insolvencies. Since the VAT gap is estimated primarily on the
basis of national accounts data, it depends on the accuracy and the
completeness of such data. Moreover, it does not take account of taxable
activities that are outside the scope of national accounts.
[3]               Excluding
  Cyprus. Source: Case Study commissioned by the EC.
[4]               Council
Regulation (EEC, EURATOM) 1553/89 of 29 May 1989 on the definitive uniform
arrangements for the collection of own resources accruing from value added tax.
[5]               See
footnote 2 : annex  Commission staff working document/ Annex to the Sixth
report under Article 12 of Regulation (EEC, Euratom) n° 1553/89 on VAT
collection and control procedures COM(2008) 719 final: Summary of State of
Implementation of Report Recommendations.
[6]               Croatia is not included in this working document as it was not yet an EU member when the
data was being collected.
[7]               Cf.
Tax administration in OECD and Selected Non-OECD Countries: Comparative
Information Series (2008); 29 January 2009.
[8]               In
the following Tables, "Y" stands for "YES"
and "N" stands for "NO"
[9]               Federally
structured tax administration. Given the particularity of the Federal Republic
of Germany, which is a federation of Lander, the situation will differ
according to the Lander.
[10]             Caption:
""T" stands for "Tax type" model, i.e.
tax administration organization model based mainly on "type of tax"
or "type of legislation" criterion, consisting in separate
multifunctional departments or pillars responsible respectively for each tax,
e.g. VAT and indirect taxes, Customs, Direct Taxes etc. "F"
stands for "Functional" model, i.e. under this model,
staff are organized according to processes by functional groupings (e.g.
registration, filing and payment, IT, audit, debt collection, etc.).
"TP" relates to "Tax Payers" and results from
the organization of the tax administration principally around segments of
taxpayers (e.g. large taxpayers, small/medium businesses, individuals, etc.).
ALL" stands for a mixture of tax, functional and taxpayers type
organisation.  Lastly, the MATRIX model corresponds to an mixed form of
organization where vertical lines are process-based and horizontal focus on
taxpayers types.
[11]             In
  Austria, there is an anti-fraud unit at central level and correspondent units
at local level. However, these units are not specialised in VAT only.
[12]             In
  Cyprus, there is a large trader function.
[13]             In
  Spain, there is a risk management function in each department (e.g. audit,
collection).
[14] In Italy enforcement of the collection of public and private debt is carried out by a separate
Enforcement Agency.
[15]             In
  Sweden, functions such as large taxpayer function and high wealth individuals
function are allocated to some regional tax offices.
[16]             In
  Sweden enforcement of the collection of public and private debt is carried
out by a separate Enforcement Agency.
[17]             In
order to compute this average, we have considered all thresholds in place in
the 21 Member States who have set up such kinds of thresholds (i.e. 25
occurrences, since EL, FR and IE have several thresholds).
[18]             The
national thresholds are converted in Euro according to the exchange rate of the
ECB on the 30 December 2011.
[19]             The
net VAT liability is the VAT due minus the VAT deductible or refunded.
[20]             According
to the EU definition, micro enterprises have a turnover up to € 2 million.
[21]             The
option for registration is in Article 290 of the EU VAT Directive.
[22]             In
  France, cross-checking of data is not possible due to legal constraints and
regulations governing the protection of IT personal data.
[23]             Rejected
registrations in percentage of 2011 number of taxpayers
[24]             This
facility will be available for the UK during 2013.
[25]             Article
22 of COUNCIL REGULATION (EU) No 904/2010 of 7 October 2010 on administrative
cooperation and combating fraud in the field of value added tax, published in
OJ 12.1.2010 L 268/1.
[26]             See
Article 23 a) and b) of the above mentioned Council Regulation 904/2010.
[27]             See
article 33 of Council Regulation No 904/2010.
[28]             In
  France, a systematic and automatic control system is introduced with effect
from 1 June 2013.
[29]             The
NL has a general domestic reverse charge mechanism for VAT due upon
importation  As there is no exemption of VAT upon importation, the
recommendations listed for this procedure in the report are not applicable to
these types of importations. This does not, however, exclude that there could
be importations where the Customs 42 procedure is used, and for which the
comments made are valid.
[30]             Poland is currently in the process of becoming an active participant of the Eurofisc.
[31]             Special Report No 13//2011 - Does the control
of the customs procedure 42prevent and detect VAT evasion? - from the
European Court of Auditors refers, in its Recommendation 4, that "the
Commission should encourage the automatic verification of the validity of VAT
identification numbers in VIES in the Member States customs electronic
clearance systems". 
[32]             No
information was made available by DE and FI.
[33]             In
  Spain, electronic filing of VAT returns is obligatory for certain groups of
taxpayers, e.g. large taxpayers. In the Czech Republic and France, electronic filing of VAT returns is obligatory as of 1 January 2014.
[34]             In
  France, notifications are sent by written letters due to legal effects.  
[35]             Taxpayers
that have stopped to comply with the VAT return filing obligation.
[36]           Fifteen
Member States did not provide data.
[37]
            The UK does not automatically pay interest in all cases of late
refunds, but the UK does pay repayment supplement where HMRC delay (excluding
reasonable enquiry time) resulted in late refunds in relation to VAT return
repayment claims.  
[38]             DE
and UK showing significant decreases over the period 2009-2011.
[39]             Statements
to be filed by taxable persons making intra-Community transactions.
[40]             Growth
in the stock of VAT debt at the end of the year calculated as a percentage of
annual VAT revenue. For Romania, there were no figures available.
[41]             CZ
is excluded since the delay for the instalment procedure can be up to 6 years
as a maximum which corresponds with the general deadline for paying taxes in
CZ. Nevertheless, the CZ tax administration may determine a shorter period
usually based a case-by-case assessment.
[42]             In
the UK the deadline for seeking review or appeal is 30 days.
[43]             In
  Spain, in case of a tax dispute, the debt collection is generally not
postponed. However, it can be postponed if the debtor guarantees the amount of
the debt by the endorsement of a credit institution or by a mortgage.
[44]             In
  France, the debtor can request the postponement of the payment of de disputed
amount.
[45]             In
the UK, the taxpayer does not have to pay the VAT in dispute prior to the
appeal if either HMCR or the appeal tribunal on appeal are satisfied that
payment would result in hardship. 
[46]             In
  Poland, the postponement of the disputed amount is only for the period of the
administrative appeal process (approximately 2 months).
[47]             The
second stage can include all kind of courts, arbitration body or mediation
body. In Spain, the second stage is also an administrative court.