VAT Issues

Created on 9th of November 2005

The EU rules on VAT are extremely complex; indeed, they were once described by a senior official in HM Revenue and Customs as 'like entering a fiscal theme park, where you lose all sense of reality!' Nevertheless, the UKTRF, in conjunction with ETRC, has maintained very close contact with the VAT unit of the Commission's TAXUD Directorate, on a wide range of issues, in order to ensure that the interests of travel retail operators are fully represented.

Although land based operators face a number of VAT issues, the rules that apply to mobile operators (ships and aircraft) are particularly complex and onerous. Because they operate in a number of different Member States, they are required to register and account for VAT in every single State that they serve. The UKTRF's main objective therefore has been to work with the Commission in order to simplify the VAT arrangements for mobile operators.

In this context, the UKTRF and ETRC made a major contribution to a detailed study undertaken in 2002/3 by Price Waterhouse Coopers on behalf of the Commission. This study, entitled the 'Simplification and Modernisation of VAT obligations in the EU', fully recognised the problems faced by mobile operators, and recommended a major simplification of the VAT rules. These are likely to take many years to be agreed and fully implemented by Member States; however the PWC report did lead to the current Commission proposal for a One-Stop Shop scheme for VAT - details of this are provided on a separate page.

The UKTRF and ETRC are also closely monitoring a number of other VAT issues. Among these is the Commission proposal for changes to the VAT rules on b2c (business to consumer) supplies, which could have significant implications for restaurant and catering services on board ships and aircraft - see the separate page on VAT place of supply rules.

Further detail on VAT issues, together with relevant Commission documents, are available on the ETRC website - click on the link below.

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