Act Amending the Value Added Tax Act

On 17 March 2014, the Ministry of Finance sent the proposed act amending the Value Added Tax Act to inter-ministerial coordination.

The proposed act will transpose the following directives:

• Council Directive 2008/8/EC of 12 February 2008 that relates to the harmonisation of regulations as regards the place of supply (taxation) of telecommunication, broadcasting and electronic services to non-taxable persons with the general rule as regards the place where the services are carried out, which follows taxation on the basis of the destination principle.
• Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State;
• Council Directive 2013/43/EU of 22 July 2013, on the common system of value added tax, as regards an optional and temporary application of the reverse charge mechanism (RCM) in relation to supplies of certain goods and services susceptible to fraud, in particular with regard to extending the application of the reverse charge mechanism for the greenhouse gas emission allowance trading;
• Council Directive 2013/61/EU as regards the French outermost regions and Mayotte in particular.

The proposed act provides for the greater transparency and clarity of provisions as regards the tax base and adjustment to charged VAT in specific cases and the adjustment to the VAT deduction associated therewith. Within the scope of measures to tackle tax fraud, the concept of several and joint liability now extends to all taxable persons, who are in any way involved in the VAT avoidance scheme. The already implemented increase in VAT rates has also been taken into account. Special arrangements have been introduced for foreign taxable persons who occasionally provide international road transport for passengers. The proposed act also pursues a modified arrangement for specifying tax offence and the amounts of fines relating to tax offence penalties, and the classification of perpetrators with regard to thresholds for imposing fines that have been prescribed by the law, which sets out the general conditions and terms for prescribing violations and sanctions therefore.