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Donato Raponi's VAT Unit has been at the forefront of sweeping changes to the way VAT is collected in the EU. From January 1 2015, VAT on telecommunications, broadcasting and electronic services will be collected in the country of the consumer, rather than supplier. Raponi spoke to International Tax Review's Joe Stanley-Smith about his team's experiences in the past 12 months.
International Tax Review: Over the past year, what do you consider to have been your biggest influence on, or achievement in, taxation?
Donato Raponi: First, working with business is very important to me. Now we are working with businesses and stakeholders and convincing tax administrations to work together on concrete issues.
What we're implementing now is a key priority: the mini one-stop shop (MOSS).
So we negotiated and organised a lot of communication around the world – in Tokyo, in the US, just to convince the companies to be compliant.
To outside eyes it is very new and it's a reason, especially if stakeholders are satisfied with the new approach concerning taxation, to use this partnership between national tax administrations and stakeholders.
In the past it was more about the philosophy of the taxation; now we are dealing with concrete problems and issues we are trying to solve.
ITR: You mentioned challenges around getting member states on board. What other obstacles have you encountered? And how were these overcome?
DR: If you compare the EU to other VAT systems, in Australia, New Zealand, Canada, we are old-fashioned.
The challenge now is to modernise EU systems. As I say, they are from 40 years ago. We have to modernise, we have to convince member states of the benefits – they have to decide to modernise the VAT system. We are now working with member states and stakeholders to see what we need from the VAT system.
We have intentions to table proposals next year and in 2016 just to modernise EU VAT systems. Public bodies are exempted in the EU, and we are trying to reduce the exemptions of the tax just to modernise.
We will continue trying to work on other issues, especially concerning compliance costs, because managing the EU VAT system is very costly, so this is on the programme for the next year or two.
ITR: How significant are the changes which come in from January 1?
DR: It's revolutionary. It's the first time in the history of the EU that one state will collect VAT for another.
Most member states are cooperating, but some member states are reluctant – especially, I would say, Germany. Germany doesn't like to rely on other member states to collect their own VAT.
From our point of view it's a revolution because it's a first step. We then need to enlarge this MOSS to become a big one-stop shop because now it's only concerned with the supply of specific services.
It means the next priority is to extend the MOSS, so that in the future there will be more integration between member states, especially in collecting VAT.
Now Japan, China, these countries are looking to the EU system to see if it will work. This is also a challenge for the future.
ITR: Are you excited that the hard work you have put in is finally coming to fruition? Do you have any apprehensions?
DR: Yes, we are monitoring it closely. We are sending teams every week to all member states. Now, we are ready, more or less.
ITR: Presumably there will be some implementation and compliance issues?
DR: Yes, mostly because we change the place of supply.
In the beginning maybe we'll have some difficulties to try to solve, and for this reason we have an instrument which is a VAT committee which is responsible for the interpretation of the legislation. We should pay attention to this and try to react as soon as possible.
ITR: Do you see any knock-on impacts of the progress you made with MOSS, such as breathing fresh life into other proposals aimed at simplification and consolidation, for example the common consolidated corporate tax base (CCCTB)?
DR: About the CCCTB, why not? It's important at the EU level also, for taxation in general not only for VAT, but also for excise duties. The concept of one-stop shop is important because you will have one single place not of taxation but of the creation, of payment of VAT.
We are not speaking any more about harmonisation of legislation, it means maybe we will give more flexibility to member states, and we can simplify the lives of businesses.
ITR: In an article you authored for International Tax Review, you said that the MOSS should be extended further, perhaps to goods. Once the regime is in place will extending it be easier?
DR: Easier, yes. I know that the vast majority of member states are supportive of this idea because they will keep their sovereignty with this system and it will simplify the lives of businesses, so from my point of view we have a chance to get an agreement I would say.
This is the reason why we decided already, before the start of this MOSS, to allow some studies in order to extend the MOSS. From my point of view we will see something in two or three years.
ITR: The VAT gap in Europe has grown again this year. Do you think that these measures are something that will combat that?
DR: Yes, we are confident. What is important is that voluntary compliance – I don't like the term voluntary compliance because compliance is always obligatory – but I think it will reduce the VAT gap especially because we are working on the definitive regime, we have a transitional regime, we are looking at what could be the best solution also to reduce the VAT gap.
We are also looking to other possibilities to collect VAT – you know, VAT collected through the taxpayer, the taxable person is collecting VAT for the tax administration and sometimes is not reliable. One solution could be having what we call a split-payment, a new means of collecting VAT, so we are reflecting on this also to reduce the tax gap.
It's also a reason why we adopted what we call the quick-reaction mechanism, giving the possibility to the member state to react, in one moment, in case they face a sudden, massive fraud.
The Global Tax 50 2014 |
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| Gold tier (ranked in order of influence) 1. Jean-Claude Juncker 2. Pascal Saint-Amans 3. Donato Raponi 4. ICIJ 5. Jacob Lew 6. George Osborne 7. Jun Wang 8. Inverting pharmaceuticals 9. Rished Bade 10. Will Morris Silver tier (in alphabetic order) Joaquín Almunia • Apple • Justice Patrick Boyle • CTPA • Joe Hockey • IMF • Arun Jaitley • Marius Kohl • Tizhong Liao • Kosie Louw • Pierre Moscovici • Michael Noonan • Wolfgang Schäuble • Algirdas Šemeta • Robert Stack Bronze tier (in alphabetic order) Shinzo Abe • Alberto Arenas • Piet Battiau • Monica Bhatia • Bitcoin • Bono • Warren Buffett • ECJ Translators • Eurodad • Hungarian protestors • Indian Special Investigation Team (SIT) • Chris Jordan • Armando Lara Yaffar • McKesson • Patrick Odier • OECD printing facilities • Pier Carlo Padoan • Mariano Rajoy • Najib Razak • Alex Salmond • Skandia • Tax Justice Network • Edward Troup • Margrethe Vestager • Heinz Zourek |
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