The EU plans to change VAT – How will this impact the tax profession?

October 2010 could mark the beginning of a landmark change for indirect tax professionals and European companies in general. The European Commission proposed the creation of a Europe-wide value added tax (VAT) to aid in funding for the next European Union budget. In this update, Peter Ratcliffe, EMEA VAT recruitment specialist discusses this announcement and how it will effect European tax recruitment.

Reform

As a way to reduce drawing contributions from already cash-strapped governments, the EU’s executive arm unveiled the potential EU VAT proposal, which would allow Brussels to directly raise its own funding for the 2014 – 2020 budget.

Currently, the majority of the €123bn EU budget is funded through contributions from EU countries, with the remainder being made up from national VAT and import duties. The EU VAT proposal will go a long way to simplifying the EU funding process without the initial capital outlay from EU nations.

Resistance

The proposal has already caused controversy with some member states. Britain, France and Germany have already voiced their dislike for a new European tax. After tough economic years encompassing a recession and debt crisis, national budgets are being cut and domestic taxes increased – leaving a bitter taste when it comes to a introducing a new EU funding tax.

The EU VAT proposal faces tough opposition across the EU and within the European Parliament, both of which must agree in order for the tax to come in to force. 2011 will see the 27 EU nations 2014 – 2020 budget thrown open to negotiation,

It is to be seen whether the EU VAT will become the new European funding tool.

Result – the impact on the tax profession

This proposal will see VAT take even more of a centre stage within EU during 2011. VAT teams have become increasingly important to corporations. With this proposal, we foresee the need for internationally mobile VAT professionals increase even further for all EU companies looking to soften the blow of a potential new tax.

We are working on a number of high-profile VAT assignments throughout the EMEA region at the moment and are well placed to offer professionals in tax targeted advice.

If you are or your company is interested in gaining an informed insight from the leading tax capital consulting experts, please contact Peter Ratcliffe on +44(0)20 7429 4414.