The single european VAT – a dream of european businesses

Business sector needs much simpler EU VAT collection and taxation adapted to economic trends, agreed participants of the CEBRE debate on 29th June in Prague.

Last year’s directive on electronic invoicing is a good example how to adapt the regulation to economic development, i.e. the use of ICT for billing and fight against late payments. The Czech Ministry of Finance has been working on the Directive implementation, which will, among other things, allow SMEs to use cash accounting (to pay the VAT only from paid invoices).

The participants from public sector, business, academia and other groups of interest also discussed the Commission’s proposal on CCCTB that promises to simplify the filing of tax returns via one-stop-shop for taxes, solve problems associated with the use of transfer pricing and cross-border losses within the group and to remove existing obstacles to the internal market (double taxation of a subsidiary’s profits and taxation of cross-border mergers and acquisitions).

According to Dana Trezziová, BDO Tax partner and representative of the Czech Confederation of Industry in the Economic & Financial Affairs Committee of BUSINESSEUROPE, European businesses welcome the CCCTB proposal under the condition that it helps them consolidate profits and losses, reduces administrative costs and stays facultative. In any case the Member States must continue to apply their national tax rates. “Cutting red tape is crucial for businesses. In the future, they would welcome a single European VAT”, Trezziová added.

Karel Havlíček, vice-president of UEAPME, does not advocate the so-called reverse charge mechanism. Nevertheless it might be, according to him, in some sectors a good tool to combat tax evasion and fraud. Regarding the CCCTB, he is more cautious and rejects any proposal for common tax rate. “If the corporate taxes were unified in the EU, it would worsen the competitiveness of individual Member States and reduce mobility of workforce which is already very law in the EU (5%).

More radical in respect of the CCCTB proposal is the Czech government who blames it for “its potential negative impact on State budget (revenue side) and control mechanism as well as on the autonomy to decide its own tax system”, said Blanka Mattauschová, Director of Excise Duty Dept. of the Czech Ministry of Finance.”