The EU are now considering the option of following the principle set out for services, where VAT would need to be charged, by the supplier, at the VAT rate of the country of destination. This could mean that a UK exporter would have to know the tax rates and tax rules of 27 states if they want to trade across Europe.
One of the main drivers is the widespread problem of VAT fraud across the EU.
The EU have set up a body called the VAT Expert Group (VEG) to debate this change and make representations to the EU Commission.
The BASDA VAT working party is chaired by Kevin Misselbrook of the Access Group and is representing the views of BASDA members in the UK business software industry on the proposed changes through our contact, Tarlochan Lall. Tarlochan is a tax barrister who sits on the VEG representing the Chartered Institute of Taxation (CIOT).
BASDA’s main concern is the very significant burden to SMEs and software suppliers and that the VEG may be underestimating the size, scope and impact of the changes under discussion.
Following a meeting on 20 June 2013, the BASDA VAT working party has taken the opportunity to identify some of the issues that will need to be addressed, based on our experiences with UK VAT compliance.
Next Steps: The BASDA VAT working party is awaiting feedback from this input and also canvassing the VEG to keep their website up to date with the latest minutes. See http://ec.europa.eu/taxation_customs/taxation/vat/key_documents/expert_group/index_en.htm).
Members can obtain a copy of the BASDA VAT working party input by contacting info@basda.org.
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