Documents considered by the Committee on 25 April 2017 Contents

17Value added taxation

Committee’s assessment

Politically important

Committee’s decision

Not cleared from scrutiny; further information requested

Document details

(a) Proposed Council Directive amending VAT legislation; (b) Proposed Council Implementing Regulation concerning the VAT Directive and (c) Proposed Council Regulation about administrative cooperation and combating fraud concerning VAT

Legal base

(a) and (c) Article 113 TFEU, special legislative procedure, unanimity; (b) Article 397 Council Directive 2006/112/EC, unanimity


HM Treasury

Document Number

(a) 38341), 14820/16 + ADDs 1–2, COM(16) 757; (b) (38342), 14821/16 + ADDs 1–2, COM(16) 756; and (c) (38343), 14822/16 + ADDs 1–2, COM(16) 755

Summary and Committee’s conclusions

17.1The Commission has published three legislative proposals intended to overcome VAT barriers to cross-border supplies of goods and services to non-business consumers. When we considered them in January 2017 we decided to retain the proposals under scrutiny pending information on their negotiation, particularly in relation to low value goods issues and the views of UK stakeholders, and on Brexit aspects of the proposals.

17.2The Government has now told us of the mixed views of both Member States and of UK stakeholders. It said that the Presidency was continuing work on the proposals, but the Government was not anticipating a Council political agreement yet. The Government also said that it was too early to say what the post-Brexit EU/UK VAT situation might be.

17.3While we are grateful for this interim account of where matters stand, we are sure the successor Committee in the new Parliament will wish to be kept informed about developments on these proposals. Meanwhile the documents remain under scrutiny.

Full details of the documents

(a) Proposed Council Directive amending Directive 2006/112/EC and Directive 2009/132/EC as regards certain value added tax obligations for supplies of services and distance sales of goods 14820/16 + ADDs 1–2, COM(16) 757: (38341), 14820/16 + ADDs 1–2, COM(16) 757; (b) Proposed Council Implementing Regulation amending Implementing Regulation (EU) No. 282/2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax: (38342), 14821/16 + ADDs 1–2, COM(16) 756 and (c) Proposed Council Regulation amending Regulation (EU) No. 904/2010 on administrative cooperation and combating fraud in the field of value added tax: (38343), 14822/16 + ADDs 1–2, COM(16) 755.


17.4In December 2016 the Commission published three legislative proposals intended to overcome VAT barriers to cross-border supplies of goods and services to non-business consumers. Changes were envisaged in two tranches with implementation in either 2018 or 2021. Key elements for 2018 focused on the improvement of the current system for cross-border sales of digital services. Changes envisaged for 2021 were more fundamental. They focused on extension of the Mini One Stop Shop accounting simplification to cover intra-EU supplies of goods to private customers and widening the services covered by it, removal of the existing VAT relief for goods valued below €22 (£18.84) coming into the EU from outside, and optional ways to collect VAT arising on imports under €150 (£128.43). These proposals would be accompanied by consequential changes, to take effect in 2021, to the Regulation concerning administrative cooperation in relation to VAT.

17.5When we considered these proposals in January 2017, the Government told us that it welcomed proposals to make it easier for businesses to trade cross border. However it implied that the proposals related to low value goods would need careful consideration and said that it would be working with stakeholders to test their understanding of the likely impacts of the proposals.

17.6While these proposals seemed to presage useful amendments to the EU’s VAT regime we retained them under scrutiny pending information on developments during their negotiation. In particular we wished to hear about consideration of the low value goods aspects and the views of UK stakeholders about possible impacts of the proposals. We asked also to hear from the Government about how much of these proposals it would wish to import into the UK’s post-Brexit VAT regime and about what form of “fiscal frontier” there might be between the EU’s VAT regime and that of the UK.

The Minister’s letter of 18 April 2017

17.7The Financial Secretary to the Treasury (Jane Ellison) has written, responding to our interest in developments in consideration and negotiation of the VAT package, particularly in relation to low-value goods aspects and the views of UK stakeholders about possible impacts of the proposals. She said that:

17.8The Minister continued that:

17.9The Minister told us that:

17.10Turning to our question as to the post-Brexit situation, the Minister said that:

Previous Committee Reports

Twenty-sixth Report HC 71-xxiv (2016–17), chapter 7 (18 January 2017).

27 April 2017