Group on the future of VAT: news for travel, transport and e-commerce

GFV (Group on the future of VAT)

The Group on the future of VAT is an Informal Commission expert groups composed of representatives of national tax administrations provide the Commission a forum for consulting VAT experts from Member States on pre-legislative initiatives. Until recently, the Commission's Directorate General for Taxation and Customs Union managed for this purpose Working Party No 1, a permanent group, and the Group on the Future of VAT, a temporary group established in the context of the Green Paper on the future of VAT.

These groups have now been merged into a single permanent expert group, named "Group on the future of VAT".

VAT in travel and tourism package

How will the VAT regulation change in the travel and transport sector? These are the three focal points on which we focus:

• the special scheme for travel agents;
• the VAT rules on passenger transport;
• the exemption on supply of goods to non-EU travellers.

Concerning the place of supply rule, in the field of VAT regulation on the carriage of passengers, one delegate suggested using the rule of the place where the consumption takes place instead of using the rule based on the residence of the traveller. In any event, this delegate was unconvinced of the perceived difficulty of dividing taxation rights between the Member States where the journey takes place and also had doubts about when the taxability of such transactions would take place.

Another delegate welcomed the presentation made by the contractor and asked if an event would be organized once the study was finalised. The Commission services replied that there would be some sort of conference or event with stakeholders and Member States.

Finally, as regards the exemption for the supply of goods to non-EU travellers, in relation to digitalisation, it was argued that attention should be paid to transit situations, i.e. when a non-EU traveler buys goods in a Member State and leaves the EU from another Member State. It has indeed been underlined that in these cases, in addition to a digital system, there should be proof that the traveler and the purchased goods actually leave the EU to obtain a VAT refund. During the meeting it emerged that these situations are problematic as they can be a source of fraud. Therefore, one of the options considered is to improve interoperability at European level.

VAT e-commerce

The Commission services reported that they had carried out a second e-commerce communication campaign to highlight some of the key findings from the ex-post evaluation. The campaign was positively received, and was one of the most viewed campaigns and delegates were thanked for their participation.

The Commission services had gathered information on the fees charged by national Universal Service Providers for postal services, which was collated in a table and published on the TAXUD Europa website in the autumn.

Delegates were informed that in light of the progress of the investigation on the postal fees in the Member States, it is too early for the Commission services to consider the fees charged disproportionate to the services rendered by the postal operators. It was noted that the fees are charged for the rendering of services in the framework of the fulfilment of customs formalities, not VAT formalities.