Oiling the cracks

Richard Asquith considers the challenges posed by the upcoming VAT reforms, especially in light of COVID-19

The EU VAT regime is creaking badly. The 27 member states are mid-way through a hugely ambitious programme of VAT reforms, designed to reboot the indirect tax regime for the challenges of billion Euro frauds and ballooning e-commerce. We are now almost half-way through implementing over ten major measures being rolled out between 2018 and 2025. But tough negotiations on the major elements – 2021 e-commerce and the 2022 Definitive VAT System – have still to be completed. 

Both of them may now fall victim to the global COVID-19 crisis.

EU VAT: time for change

Since the inception of the EU single market in 1993, the EU VAT regime has remained largely unchanged. Since then, two major forces have exposed the need for radical change: