The committee endorses the proposal that the definitive VAT system should be based on the country of destination principle because it will create a level playing field for all suppliers in the same national market, regardless of where they are headquartered. According to the Action Plan, the country of destination principle only applies to goods in the first transitional phase. For the sake of simplicity and to avoid further complications, the committee has called on the Commission and the Member States to consider how services can be incorporated more quickly into the new system and to examine how financial services can be more generally subject to VAT.
At the same time, the Committee points out that the new system must be clear, coherent, balanced, proportionate and future-proof. In this context, the EESC is calling on the European Commission to prudently examine the possibility of introducing a generalised reverse charge system for all cross-border B2B transactions. According to the EESC, although the reverse charge procedure is already being used in some Member States to reduce VAT fraud in certain economic sectors, the general application of this principle could lead to VAT fraud being shifted to the retail level.
The EESC calls for the role and strategic importance of social enterprises to be taken into consideration in the future definitive VAT system. In this respect, a potential revision of Point 15 of Annex III of Directive 112/2006 should be considered or a new provision should be added on applying the reduced tax rate for social, health and education services for disadvantaged people via formally recognised institutions. In particular, consideration should be given in the new VAT system to the possibility of eliminating or reducing the VAT applicable to goods and services for people who are disabled or disadvantaged. Furthermore, the Commission recommends that existing VAT exemptions used in a number of Member States for non-profit organisations be maintained because of the specific nature of these organisations and the absence of a cross-border dimension.