In an attempt to simplify the reporting burden for companies doing business across the EU, the European Commission presented a draft Directive for a standard EU VAT return in October 2013, with the hope of having it implemented by January 2017.
On Friday the 20th of June 2014, all EU member states reached political consensus on the proposed implementation of a standard EU VAT return for all of the 28 EU member states.
Variations in EU VAT returns
There are a large amount of variations in European VAT returns, EU VAT returns are designed to capture monthly, quarterly and yearly information on the sale and purchase of products and services that are liable for VAT.
Currently all 28 member states in the EU run their own VAT returns, deciding what information is required and what supporting documents are needed. The differences in the information required for the VAT returns are vast. Ireland requires minimal information, with only approximately 6 boxes to complete, compared to the Italian VAT return, which has over 500.
Companies trading across the EU experience a huge compliance burden dealing with the variations in VAT returns. The Directive was put forward as the European Commission believe that a standardised VAT return would help reduce the amount of VAT that is undeclared, or incorrectly declared, and thereby would decrease the VAT gap.
Proposed simplified VAT return
The proposed VAT return design will include 5 compulsory information boxes for taxpayers to complete, with an additional 26 boxes for member states to choose from. The returns would then be submitted on a monthly basis for business above €2 billion and a quarterly basis for those below €2 billion.