6.9.2022
EN
Official Journal of the European Union
C 342/93 Wednesday 16 February 2022
4.
Takes the view that applying a multitude of reduced rates has a legitimate purpose in society, notably to reduce the regressiveness of the VAT system and help to achieve certain national policy objectives, such as access to essential goods and sectors such as health and food, but that it also aggravates the complexity and opacity of the tax system, increases compliance costs and may facilitate fraud; understands that the application of reduced rates can lead to a decrease in the price to the consumer, but depends on several other factors; notes, therefore, that a thorough analysis and impact assessment need to be carried out;
5.
Notes the significant differences in the standard rates applied in the Member States and the complexity that this brings to the system, even if justified by different national economic systems; underlines that this complexity is aggravated by the different ways in which reduced rates are applied, which is legitimate in order to pursue social and environmental objectives; recalls that the possibility to apply super reduced rates (in five Member States) or parking rates (in five Member States) constitutes an additional obstacle to a coherent and fully interoperable common system;
6.
Understands that the system is becoming increasingly complicated because of the different rates, but also because of exemptions and derogations, which must be exceptions; recalls the specific situation of unequal treatment of Member States who joined before and after 1992, to which different rules apply; calls on the Commission to address this issue in future legislative proposals;
7.
Notes that, over the past two decades, the Commission has launched almost 200 infringement procedures on VAT; calls on it to present a summary of the main findings of these procedures as a basis for future legislative proposals, namely on reduced rates, exemptions and non-transposition;
8.
Notes that the COVID-19 pandemic justified VAT-related exception rules, which proves the need for a degree of flexibility when facing urgent or unexpected circumstances; urges the Commission to take this into account in future legislative proposals regarding VAT;
9.
Observes that the VAT gap fluctuates in line with the business cycle, and that low tax compliance is sometimes associated with high standard VAT rates, lower legal and judicial efficiency, weaker legal institutions, higher perceived levels of corruption and the overall share of the shadow economy in the wider economy;
10.
Notes with concern that some Member States do not generally exempt in-kind donations from VAT, leading businesses to destroy consumer goods, notably returns, even though such an exemption is possible under the existing VAT Directive; calls on the Commission to issue guidance to Member States, clarifying that VAT exemptions for in-kind donations will be compatible with the existing EU law on VAT until Council proposal COM(2018)0020 (Article 98(2)) is adopted by the Member States;
11.
Regrets the lack of available data on regional differences, which could be a major limitation for measuring the VAT gap; calls on the Commission to check whether producing and publishing regional VAT gap measurements could be a valuable tool in improving transparency and reducing the VAT gap;
Impact of the wide variety of reduced rates on businesses
12.
Takes the view that the current diversity of reduced rates creates additional administrative burdens for businesses; notes that the total cost of VAT compliance ranges from 1 % to 4 % of company turnover within the Member States; notes that digitalisation can contribute greatly to the reduction of compliance costs for businesses;
13.
Observes that SMEs pay proportionately higher compliance costs, as these costs are fixed and independent of company size, and that high compliance costs constitute a barrier to entry into the EU internal market; takes the view, therefore, that differentiated VAT regimes within the EU may act as a disincentive to intra-EU trade for all businesses, specially for SMEs; notes, however, that the empirical evidence is inconclusive regarding the effects of differentiated VAT systems on international trade, and whether they could create an unequal playing field in such trade, notably due to high compliance costs, exemptions and deficient refund systems: