The EU are reviewing the operation of Vat within the European Union. The following proposals have been made: The Cornerstones of a definitive vat regime

1. The principle of taxation at destination for intra-EU cross border supplies of goods. Under this principle the Vat rate of a member state of destination, where the buyer is located, is charged.

2. The confirmation that the vendor is liable in the case of an intra-EU supply of goods as a general rule, which means that the seller is responsible for charging and collecting the Vat. However, if the buyer is a ‘certified taxable person’ it is the buyer who is liable for payment of Vat due directly to the treasury of the member state of destination.

3. The ‘one stop shop’ will be extended. Businesses will be able to make declarations, payments and deductions for cross-border supplies of goods through a single online portal, as is already the case for the supply of e-services.

The quick fixes The commission also presented four quick fixes to improve the day-to-day functioning of the current system, until the definitive regime has been fully agreed.

1. Simplification of Vat rules for companies moving goods from one member state to another member state where they are to be stored before being supplied to a customer known in advance. This is known as ‘call-off stock arrangements’. The simplification is limited only to certified taxable persons.

2. Simplification provided for chain transaction situations identifying the supply with which the intra-community transport of goods should be linked. This simplification is limited only to certified taxable persons.

3. Simplification of the proof of transport of goods between two members states needed for the application of the exemption to intra-community supplies. This simplification is limited only to certified taxable persons.

4. Certification that, in addition to the proof of transport, the Vat number of the commercial partners recorded in the electronic EU Vat-number verification system (VIES) is required in order to apply the cross-border Vat exemption under the current rules.

A certified taxable person A business can apply to its national tax authority and become a certified taxable person (CTP) by proving compliance with pre-defined criteria such as:

• Regular payment of taxes
• Internal controls
• Proof of solvency

The status of certified taxable person will be mutually recognised by all EU Member States.

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