Wednesday 27th Nov 2019 the EU Parliament approved the new Commissioners presented to plenary by Commission President-elect Ursula von der Leyen.
During her opening statement, she reiterated many of the commitments she made in Parliament’s plenary chamber in July, and by the Commissioners-designate during the hearings process. She highlighted that appropriate investment and regulatory frameworks will be put into place for Europe to lead the way internationally on a range of critical issues: environmental protection and climate change, growth, inclusion, innovation and digitalisation, as well as the protection of democracy, European values, citizens’ rights and the rule of law. She also confirmed one more portfolio change that Parliament had requested following the hearings, which established the candidates’ suitability for the role and for the College of Commissioners.
We all hope this new Commission will take – and implement – the right decisions to make Europe outstanding again after being squeezed for longtime between the powerful markets of USA and China in many regards and in particular for innovation and markets expansion worldwide.
One thing that should be changed and updated is the VAT issue across the EU. We know that as consumers we pay VAT on nearly every item we buy whereas VAT-registered businesses have to add VAT to their products/services. Once received payments, they have to transfer the VAT amount to their own governments’ revenues agencies generating a workload that is not paid by anyone and, on top of it, has to be paid for to the companies accountants when their process VAT returns. A different process is in place when the VAT reverse charge applies (see the invoicing rules in the EC here).
The entire VAT topic should be aligned to the new trends of working habits and ways of providing services. For instance, an IT or intellectual work can nowadays be provided from anywhere and not necessarily at the provider’s office or client’s premises.
As now travelling on business has become very normal and widespread, it should be possible to recover VAT generated in any EU country. When going to VAT-registered hotels or restaurants – for instance – in one of the European cities, we pay some tens of Euros in local VAT that cannot be recovered. If this happens frequently it may represent a remarkable cost for businesses especially when visiting those countries where the VAT rate is rather high (e.g. over 15%).
Currently there is still an embarrassing amount of confusion among European citizens regarding the concepts of European Union (for the time being still EU 28 countries), Schengen countries (22 EU countries + Iceland, Liechtenstein, Norway and Switzerland), Eurozone (19 EU countries) and countries that use the Euro currency (Eurozone + Andorra, Monaco, San Marino, and Vatican City that have formal agreements with the EU to use the Euro as their official currency and issue their own coins. Kosovo and Montenegro have adopted the Euro unilaterally, but these countries do not officially form part of the Eurozone).
To encourage the way of doing business in/with the EU it would be good to reduce bureaucracy and avoid internal competition among EU countries (from the fiscal point of view).
Stefano Mainero
EPN Consulting Founder & CEO