Cooperation VAT [EU]

Administrative cooperation in the field of value added tax (VAT)

The European Union (EU) has introduced a common system of administrative cooperation and information exchange for EU countries to ensure proper application of value added tax (VAT) and to combat fraud.

Council Regulation (EC) No 1798/2003 of 7 October 2003 on administrative cooperation in the field of value added tax and repealing Regulation (EEC) No 218/92 [See amending act(s)].

Summary

This regulation determines the conditions of cooperation between national authorities responsible for applying value added tax (VAT) legislation on:

supplies of goods and services;
intra-Community acquisition of goods;
importation of goods.

It also provides a structure for cooperation between these national authorities and the Commission.

More precisely, the regulation lays down rules and procedures to enable the competent authorities of EU countries to cooperate and to exchange any information that may help them assess VAT correctly.

Definition of parties concerned and procedures

Each EU country designates a single central office to act as a point of contact for administrative cooperation. The competent authorities of EU countries may designate liaison departments and/or competent officials for direct exchanges of information. The central liaison offices are responsible for maintaining up-to-date lists of these departments or officials and making them available to the other EU countries concerned.

Liaison departments and competent officials are required to inform their central liaison office when they send or receive a request for assistance or a reply to a request for assistance. They must also notify their central liaison office and competent authority of any request for assistance received that requires action outside their territorial or operational area.

The obligation for EU countries to assist each other does not cover the provision of information or documents obtained by the authorities when acting with the authorisation or at the request of a judicial authority, unless provided for in their national law.

Exchange of information on request

This concerns requests for information and for administrative enquiries sent by the competent authority of one EU country (the requesting authority) to the competent authority of another EU country (the requested authority) to obtain information that may help with the correct assessment of VAT. The requested authority has the obligation to provide the information requested. To that end, it may make administrative enquiries and act for the requesting authority as if it were acting on its own behalf.

The requesting authority may make a reasoned request for an administrative enquiry. In such cases, the requested authority must justify any failure to carry out the enquiry.

The requesting authorities must use a standard form for all requests for information and administrative enquiries.

As regards the time limit for providing information, the requested authority must provide the information without delay and no later than three months following the date of receipt of the request. However, if the requested authority is already in possession of the information, the time limit is reduced to a maximum of one month. In certain cases, the requesting and requested authorities may agree on different time limits.

If the requested authority is unable to respond to the request by the deadline, it must immediately inform the requesting authority in writing of the reasons for its failure to do so and indicate a timeframe within which it will be able to respond.

The requesting and requested authorities may agree to allow officials of the first to be present in the administrative offices of the latter. The officials of the requesting authority may also participate in the administrative enquiries with a view to exchanging information, but never to exercise the powers of inspection conferred on the officials of the requested authority. They must at all times be in possession of a written authority, which states their identity and official capacity.

EU countries may also agree to conduct simultaneous controls in their respective territories on the tax situation of taxable persons, if this is more effective than controls carried out by only one EU country.

Exchange of information without prior request

The competent authority of an EU country must forward information by automatic or structured automatic exchange to the competent authority of the EU country concerned when:

tax is meant to be charged in the EU country of destination and the effectiveness of the control system depends on information from the EU country of origin;
an EU country believes that a breach of VAT legislation has or might have been committed in the other EU country;
there is a risk of tax loss in the other EU country.

The exact categories of information to exchange, the frequency of exchanges and the practical procedures for exchanging information are determined by the Commission, assisted by a standing committee on administrative cooperation. In addition, each EU country must determine whether it will take part in the exchange of a particular category of information and whether it will do so in an automatic or structured automatic way.

The competent authorities of EU countries may forward to each other any information of which they are aware by spontaneous exchange.

Storage and exchange of information relating to intra-Community transactions

Each EU country must maintain an electronic database in which it stores and processes information relating to VAT. It is the responsibility of each EU country to ensure that its database is complete, accurate and kept up to date.

The competent authority of an EU country can obtain directly from any other EU country, or have direct access to, data stored on:

VAT identification numbers issued by the EU country receiving the information;
the total value of all intra-Community supplies of goods and services to persons holding a VAT identification number by all operators identified for the purposes of VAT in the EU country providing the information.

If necessary for the control of intra-Community acquisition of goods and supply of services to prevent a breach of VAT legislation, the competent authority of an EU country must receive directly, or have direct electronic access to, the following information:

the VAT identification numbers of the persons who effected the intra-Community supplies of goods and services;
the total value of such supplies to persons holding a VAT identification number.

EU countries must provide access to the information without delay and no later than one month from the end of the period to which the information relates.

Conditions governing the exchange of information

The requested authority may refuse a request for assistance. In such cases, it must always inform the requesting authority of its reasons. Requests for assistance may be refused if the provision of information:

imposes a disproportionate administrative burden;
is contrary to the laws or administrative practices of the requested EU country;
leads to the disclosure of commercial, industrial or professional secrets;
is against public policy.

Information communicated on the basis of this regulation is covered by the obligation of official secrecy and is protected under the national law of the EU country that received it. Therefore, this information may only be used for clearly specified purposes, such as:

establishing the assessment base;
collection or administrative control of tax (for the purpose of establishing the assessment base);
assessment of other levies, duties and taxes covered by Article 2 of Council Directive 76/308/EEC; and
in connection with judicial proceedings that may involve penalties, initiated as a result of infringements of tax law (the documents may be invoked as evidence).

Background

This regulation belongs to a series of tax harmonisation measures taken to complete the internal market.

In the past, two legal instruments were used for administrative cooperation on tax matters: Directive 77/799/EEC concerning mutual assistance by the authorities of the EU countries in the field of direct and indirect taxation, and Regulation (EEC) No 218/92 on administrative cooperation in the field of indirect taxation. However, the fact that there were two separate legal instruments proved a hindrance to effective cooperation on VAT.

In the interests of facilitating contacts between local and/or national tax authorities to combat fraud more effectively, this regulation brings together and reinforces the provisions of the two acts in a single legal instrument.

REFERENCES

Act	Entry into force	Deadline for transposition in the Member States	Official Journal
Regulation (EC) No 1798/2003	1.1.2004	–	OJ L 264 of 15.10.2003

Amending act(s)	Entry into force	Deadline for transposition in the Member States	Official Journal
Regulation (EC) No 885/2004	1.5.2004	–	OJ L 168 of 1.5.2004
Regulation (EC) No 1791/2006	1.1.2007	–	OJ L 363 of 20.12.2006
Regulation (EC) No 143/2008	20.2.2008	–	OJ L 44 of 20.2.2008
Regulation (EC) No 37/2009	1.1.2010	–	OJ L 14 of 20.1.2009

Administrative cooperation in the field of VAT (from 1.1.2012)

The regulation establishes common rules and procedures for administrative cooperation and information exchanges between national competent authorities to properly apply value added tax (VAT) and to combat fraud.

ACT

Council Regulation (EU) No 904/2010 of 7 October 2010 on administrative cooperation and combating fraud in the field of value added tax.

Summary

This regulation sets out rules and procedures for cooperation and exchanges of information between European Union (EU) countries’ competent authorities responsible for applying value added tax (VAT), with a view to:

assessing VAT correctly;
monitoring the correct application of VAT;
combating VAT fraud;
protecting VAT revenue.

Each EU country must designate a single central liaison office as a contact point for cooperation with the other EU countries and the Commission. EU countries may also designate liaison departments and/or competent officials for direct exchanges of information. The liaison departments and competent officials must notify their central liaison office of any requests or replies to requests for assistance they send or receive. If a request received is outside of their territorial or operational area, it must be forwarded to the central liaison office.

Exchanging information

The requesting authority sends requests for information and for administrative enquiries to the requested authority using a standard form. The latter must provide the information without delay and at the latest within three months from the date of receipt of the request. If the requested authority already possesses the information requested, it must send it within one month from the date of receipt of the request.

Without any prior requests, the competent authorities must automatically provide each other with certain categories of information using a standard form when:

information from the EU country of origin is essential for the control system of the EU country of destination where taxation will take place;
there is reason to believe that a breach of VAT legislation has been or will be committed in the EU country of destination;
there is a risk of tax loss in the EU country of destination.

The competent authorities should spontaneously exchange any other necessary information not forwarded automatically. They may request feedback from the receiving authority on the information exchanged.

If the information received is likely to be useful to the competent authority of a third EU country, the requesting authority may transmit it, provided that it first informs the requested authority or, if required, obtains the permission of the requested authority.

As far as possible, information exchanges should be carried out by electronic means. The provision of information may be refused if:

the number and nature of requests for information within a specific period from the requesting authority impose a disproportionate administrative burden;
the usual sources of information have not been exhausted by the requesting authority;
the laws and procedures of the requested EU country do not permit the carrying out of the enquiry or the collection or use of the information;
for legal reasons, the requesting EU country cannot provide similar information;
it would lead to the disclosure of a commercial, industrial or professional secret or it is against public policy.

For the purpose of exchanging information, and by agreement between the requesting and requested authority, officials of the former may be present at the offices of the latter and have access to copies of documents containing the information requested. These officials may also participate in the administrative enquiries carried out in the requested EU country; however, they may not exercise the powers of inspection conferred on the hosting officials.

EU countries may also decide to carry out simultaneous controls, if this is more effective than controls carried out by only one EU country.

The regulation establishes specific provisions concerning the special scheme for non-established taxable persons supplying electronic services to non-taxable persons.

Storing information

Each EU country must store the following up-to-date information in an electronic system for at least five years starting from the end of the first calendar year in which access to it is granted, by automated means, to the other EU countries:

information provided in the recapitulative statements submitted by taxable persons identified for VAT purposes;
data on persons to whom the EU country has issued a VAT identification number;
data on VAT identification numbers that have become invalid;
information on non-established taxable persons.

Combating VAT fraud

This regulation establishes a network for the swift exchange of targeted information between EU countries (Eurofisc) to improve multilateral cooperation in combating VAT fraud. In this context, EU countries will set up a multilateral early warning mechanism, as well as coordinate the activities of national Eurofisc officials acting on any warnings received.

Cooperating on VAT refunds

Apart from certain exceptions, the competent authority of an EU country must forward applications for refunds of VAT it receives from taxable persons established in another EU country to the competent authorities of the EU countries of refund concerned. This must be done by electronic means within 15 days from the date of receipt of the application. The authorities of the EU countries of refund must notify by electronic means the authorities of the other EU countries if they require additional electronic coded information on the nature and services of the applicants or if they require the applicants to provide a description of their business activities by using harmonised codes.

Cooperating with non-EU countries

Provided that the assistance arrangements with the non-EU country in question allow it, the competent authority of an EU country may forward information it received from that country to the EU countries that request it and to any other EU country to which it may be of interest. The competent authorities of EU countries may forward information to non-EU countries if the:

EU country from where the information originates consents;
non-EU country in question has agreed to cooperate in gathering evidence of irregular transactions that seem to contravene VAT legislation.

Applying this regulation

This regulation repeals Regulation (EC) No 1798/2003 as of 1 January 2012, with the exception of Chapter V (excluding Article 27(4)) that will remain applicable until 31 December 2012.

Articles 33 to 37 of this regulation will apply from 1 November 2010. Articles 38 to 42 will apply from 1 January 2012. Chapter V, except for Articles 22 and 23, will apply from 1 January 2013. Articles 43 to 47 will apply from 1 January 2015.

REFERENCES

Act	Entry into force	Deadline for transposition in the Member States	Official Journal
Regulation (EU) No 904/2010	1.11.2010	–	OJ L 268 of 12.10.2010

Updates

Regulation (EU) 2020/283 introduces an amendment requiring the Commission to develop, maintain, host and technically manage a central electronic system of payment information (CESOP) for the purpose of investigations into suspected VAT fraud or to detect VAT fraud. CESOP will store the payment data collected by EU countries and aggregate it per beneficiary, as well as cross-check it with the other information exchanged under Regulation (EU) No 904/2010. Data in CESOP will only be made available to anti-fraud experts of EU countries. This will apply from 1 January 2024.

Directive (EU) 2020/285 introduces simplified rules to reduce the administrative burden and compliance costs for small businesses and to create a more advantageous tax environment to help them grow and trade across borders more efficiently. Small businesses will be able to qualify for simplified VAT compliance rules where their annual turnover remains below a threshold set by the EU country concerned, which cannot be higher than €85,000. Under certain conditions, small businesses from other EU countries, which do not exceed this threshold, will also be able to benefit from the simplified scheme if their total annual turnover in the whole of the EU does not exceed €100,000. These new rules apply from 1 January 2025.

VAT refunds

EU countries forward the applications for VAT refunds they receive from taxable persons established in other EU countries to the authorities of the EU countries of refund concerned. This is done electronically within 15 days from the date of receipt of the application. The authorities of the EU countries of refund must notify the authorities of the other EU countries if:

they require additional electronically coded information on the nature and services of the applicants; or
if they require the applicants to provide a description of their business activities by using harmonised codes.

Non-EU countries

Provided that the assistance arrangements with the non-EU country in question allow it, the competent authority of an EU country may forward information it receives from that country to any EU country that requests it or to any other EU country to which it may be of interest. EU countries’ authorities may forward information to non-EU countries if:

the EU country from where it originates consents;
the non-EU country in question has agreed to cooperate in gathering evidence of irregular transactions that may breach VAT legislation.

Electronic commerce

As part of a package of measures to modernise the EU’s VAT system and to adapt it to EU cross-border business and consumer e-commerce, Regulation (EU) 2017/2454 amends Regulation (EU) No 904/2010 by introducing rules that will increase administrative cooperation between EU countries. The 2017 amending regulation ensures that supplies of services and distance sales of goods under Directive (EU) 2017/2455 (which, in turn, amends Directives 2006/112/EC — see summary and 2009/132/EC — see summary) are covered. It applies from January 2021.

Among other things, the regulation requires that:

the identification number under which VAT is paid is provided in advance to allow customs authorities to check its validity when importing goods;
requests for records and administrative enquiries made by EU countries to taxable persons will be coordinated by the country of identification*.
At the beginning of 2020, the Commission adopted Implementing Regulation (EU) 2020/21, concerning administrative cooperation and combating fraud in the field of VAT, and Implementing Regulation (EU) 2020/194, laying down details on the working of the VAT one-stop shop for sales of online goods.

Both implementing regulations contribute to ensuring that VAT is paid in the EU country of the final consumer, leading to a fairer distribution of tax revenues amongst EU countries.

Due to the COVID-19 crisis, these new VAT e-commerce rules will only apply as of 1 July 2021 instead of entering into force on 1 January 2021 (Implementing Regulation (EU) 2020/1318).

This will also allow all EU countries to finalise the necessary IT systems to implement and apply those changes.

Background & Context

It has applied since 1 January 2012.

BACKGROUND

For more information, see:

VAT and administrative cooperation (European Commission).
KEY TERMS

Country of identification: the country in which the taxable person is registered for using the mini one-stop shop* and where it declares and pays the VAT in the country (or countries) of consumption.
Mini one-stop shop: a system which, since 2015, has allowed taxable persons supplying services such as telecommunication, television and radio broadcasting and electronically supplied ones to non-taxable persons in EU countries in which they do not have an establishment to account for the VAT due on those supplies via a web portal in the EU country of identification.

MAIN DOCUMENT

Council Regulation (EU) No 904/2010 of 7 October 2010 on administrative cooperation and combating fraud in the field of value added tax (OJ L 268, 12.10.2010, pp. 1-18)

Successive amendments to Regulation (EU) No 904/2010 have been incorporated in the original text. This consolidated version is of documentary value only.

Cooperation VAT [EU]

Administrative cooperation in the field of value added tax (VAT)

Summary

Definition of parties concerned and procedures

Exchange of information on request

Exchange of information without prior request

Conditions governing the exchange of information

Background

Administrative cooperation in the field of VAT (from 1.1.2012)

Summary

Exchanging information

Storing information

Combating VAT fraud

Cooperating on VAT refunds

Cooperating with non-EU countries

Applying this regulation

Updates

VAT refunds

Non-EU countries

Electronic commerce

Background & Context

MAIN DOCUMENT

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