Donato Raponi's VAT Unit has been at the forefront of sweeping
changes to the way VAT is collected in the EU. From January 1
2015, VAT on telecommunications, broadcasting and electronic
services will be collected in the country of the consumer,
rather than supplier. Raponi spoke to International Tax
Review's Joe Stanley-Smith about his team's experiences in
the past 12 months.
|Donato Raponi is
a new entry this year
International Tax Review: Over the past year, what
do you consider to have been your biggest influence on, or
achievement in, taxation?
Donato Raponi: First, working with business
is very important to me. Now we are working with businesses and
stakeholders and convincing tax administrations to work
together on concrete issues.
What we're implementing now is a key priority: the mini
one-stop shop (MOSS).
So we negotiated and organised a lot of communication around
the world – in Tokyo, in the US, just to convince the
companies to be compliant.
To outside eyes it is very new and it's a reason, especially
if stakeholders are satisfied with the new approach concerning
taxation, to use this partnership between national tax
administrations and stakeholders.
In the past it was more about the philosophy of the
taxation; now we are dealing with concrete problems and issues
we are trying to solve.
ITR: You mentioned challenges around getting
member states on board. What other obstacles have you
encountered? And how were these overcome?
DR: If you compare the EU to other VAT
systems, in Australia, New Zealand, Canada, we are
The challenge now is to modernise EU systems. As I say, they
are from 40 years ago. We have to modernise, we have to
convince member states of the benefits – they have to
decide to modernise the VAT system. We are now working with
member states and stakeholders to see what we need from the VAT
We have intentions to table proposals next year and in 2016
just to modernise EU VAT systems. Public bodies are exempted in
the EU, and we are trying to reduce the exemptions of the tax
just to modernise.
We will continue trying to work on other issues, especially
concerning compliance costs, because managing the EU VAT system
is very costly, so this is on the programme for the next year
ITR: How significant are the changes which come in
from January 1?
DR: It's revolutionary. It's the first time
in the history of the EU that one state will collect VAT for
Most member states are cooperating, but some member states
are reluctant – especially, I would say, Germany.
Germany doesn't like to rely on other member states to collect
their own VAT.
From our point of view it's a revolution because it's a
first step. We then need to enlarge this MOSS to become a big
one-stop shop because now it's only concerned with the supply
of specific services.
It means the next priority is to extend the MOSS, so that in
the future there will be more integration between member
states, especially in collecting VAT.
Now Japan, China, these countries are looking to the EU
system to see if it will work. This is also a challenge for the
ITR: Are you excited that the hard work you have
put in is finally coming to fruition? Do you have any
DR: Yes, we are monitoring it closely. We
are sending teams every week to all member states. Now, we are
ready, more or less.
ITR: Presumably there will be some implementation
and compliance issues?
DR: Yes, mostly because we change
the place of supply.
In the beginning maybe we'll have some difficulties to try
to solve, and for this reason we have an instrument which is a
VAT committee which is responsible for the interpretation of
the legislation. We should pay attention to this and try to
react as soon as possible.
ITR: Do you see any knock-on impacts of the
progress you made with MOSS, such as breathing fresh life into
other proposals aimed at simplification and consolidation, for
example the common consolidated corporate tax base
DR: About the CCCTB, why not? It's
important at the EU level also, for taxation in general not
only for VAT, but also for excise duties. The concept of
one-stop shop is important because you will have one single
place not of taxation but of the creation, of payment of
We are not speaking any more about harmonisation of
legislation, it means maybe we will give more flexibility to
member states, and we can simplify the lives of businesses.
ITR: In an article you authored for
International Tax Review, you said that the MOSS
should be extended further, perhaps to goods. Once the regime
is in place will extending it be easier?
DR: Easier, yes. I know that the vast
majority of member states are supportive of this idea because
they will keep their sovereignty with this system and it will
simplify the lives of businesses, so from my point of view we
have a chance to get an agreement I would say.
This is the reason why we decided already, before the start
of this MOSS, to allow some studies in order to extend the
MOSS. From my point of view we will see something in two or
ITR: The VAT gap in Europe has grown again this
year. Do you think that these measures are something that will
DR: Yes, we are confident. What is
important is that voluntary compliance – I don't like
the term voluntary compliance because compliance is always
obligatory – but I think it will reduce the VAT gap
especially because we are working on the definitive regime, we
have a transitional regime, we are looking at what could be the
best solution also to reduce the VAT gap.
We are also looking to other possibilities to collect VAT
– you know, VAT collected through the taxpayer, the
taxable person is collecting VAT for the tax administration and
sometimes is not reliable. One solution could be having what we
call a split-payment, a new means of collecting VAT, so we are
reflecting on this also to reduce the tax gap.
It's also a reason why we adopted what we call the
quick-reaction mechanism, giving the possibility to the member
state to react, in one moment, in case they face a sudden,