Brexit, Council and VAT changes

Brexit

The UK government has decided the date of the UK withdrawal: the 29th March 2019. This was the UK's sovereign decision. Mrs May has asked to benefit from the Single Market and the Customs Union for a short period after this. The European Council has indicated its readiness to consider this request. The conditions are clear: everyone has to play by the same rules during this transition. (Source: EC statement, February 5th 2018)

Council removes eight jurisdictions from EU list of non-cooperative tax jurisdictions 

Meeting on 23 January, EU finance ministers removed eight jurisdictions from the EU’s list of non-cooperative jurisdictions for tax purposes, following commitments made at a high political level to remedy EU concerns. Barbados, Grenada, the Republic of Korea, Macao SAR, Mongolia, Panama, Tunisia and the United Arab Emirates were moved to a separate category of jurisdictions subject to close monitoring. The decision leaves nine jurisdictions on the list of non-cooperative jurisdictions out of the 17 initially announced on 5 December 2017. (Source: EC Economic and Financial affairs e-news 171, February 1st 2018)

VAT: More flexibility on VAT rates, less red tape for small businesses

The Commission has proposed new rules to give Member States more flexibility to set Value Added Tax (VAT) rates and to create a better tax environment to help SMEs flourish. The proposals presented on 18 January are the final steps of the Commission’s overhaul of VAT rules, which is intended to create a single EU VAT area that dramatically reduces the EUR 50 billion lost to VAT fraud each year in the EU, while supporting business and securing government revenues. The EU’s common VAT rules, agreed by all Member States in 1992, are out of date and too restrictive. They allow Member States to apply reduced VAT rates to only a handful of sectors and products. As a result of the changes, countries will be on a more equal footing when it comes to some existing exceptions to the rules, known as VAT derogations. Moreover, the new rules also address the problem of smaller companies suffering from disproportionate VAT compliance costs. Businesses trading cross-border face 11% higher compliance costs compared to those trading only domestically, with smaller players hit hardest. Under the new rules, VAT-related compliance costs will be cut by as much as 18% per year. (Source: EC Economic and Financial affairs e-news 171, February 1st 2018)

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