was also in the Global Tax 50
Donato Raponi has been a Global Tax 50 regular since 2014
when 28 member states prepared for sweeping changes to the way
VAT was collected across the EU.
Since January 1 2015, VAT on business-to-consumer (B2C)
transactions has been paid to the country where the consumer is
located, rather than to the country where the business is
based, as was previously the case.
These changes were made possible by the mini one-stop-shop
– a single VAT registration portal that means EU and
non-EU business only need to register once for VAT, rather than
in every member state where they operate. This is known as the
destination principle, and, during the past year, it has been
solidified as the global best practice in the OECD's
International VAT/GST Guidelines, and recommended in BEPS
The changes have been so successful that since they were
implemented, several more countries, namely South Africa, South
Korea, Japan and New Zealand have implemented similar rules,
and more countries have announced that they intend to do so
soon. Russia's regime, based on the destination principle, will
be effective from January 1 2017, with Australia's to be
effective from July.
The EU had some minor difficulties when first implementing
the VAT changes, mostly IT-related, but is using its experience
to assist jurisdictions bringing in similar regimes.
"We are very proactive because we are participating through
meetings," Raponi told International Tax Review. "The
EU, especially in VAT, has very old experience, very large
experience. It's the reason why we are contributing very
positively. We are trying to pass on our ideas. It is very
interesting to see other countries implementing what we decided
to implement some years ago."
However, the ambitious 2015 changes were not the final step
towards improving VAT in the EU. On April 7 2016, the European
Commission (EC) adopted the VAT Action Plan, which aims to move
the EU toward a single VAT area. Once approved by the European
Parliament, it will fire the starting gun for further changes
in VAT, affecting B2B supplies and supplies of goods.
"We are preparing the Action Plan, we will deliver the
definitive regime next year," said Raponi.
In November 2016, the two important initiatives were
"The first one is an e-commerce proposal. It has two sides:
firstly, improving the mini one-stop shop, for example,
introducing a threshold [under which the smallest businesses
would revert to their domestic VAT regime for simplicity's
"The second aspect, which is really important, is enlarging
the scope, especially to commodities," Raponi said. The mini
one-stop shop applied only to electronic services, broadcasting
and telecommunications, but the Commission has adopted a plan
in principle to extend this simplification procedure to
commodities within the EU. It will also apply to importation,
for which the importation threshold will be removed and a
simplified scheme to declare and pay VAT on importation will be
In most countries with VAT or GST regimes, low-value goods
are subject to an exemption – in the EU, this
exemption is for goods worth €22 ($23) or less. However,
these rules were devised before the explosion of e-commerce,
which increased the amount of goods sold to consumers by
In another example of EU VAT developments influencing the
wider world, Australia is also set to remove its low-value
goods exemption, which sits at A$1,000 ($745).
"Some months ago they [representatives from the Australian
Tax Office] visited the Commission and also different member
states," Raponi said. "So we had an influence, especially
concerning the mini one-stop shop mechanism, because it seems
that this mechanism is implemented in different countries
around the world. It's a good example, because finally the mini
one-stop shop has been very successful."
The member states collected more than €3 billion from
the mini one-stop shop, and the number of businesses using the
mechanism is increasing. "We started at 8,000, now we have
14,000 businesses using this mini one-stop shop, but also you
know platforms and intermediaries are using it also," Raponi
said. "You don't hear that member states are complaining,
businesses seem to be happy. It's the reason why we are
proposing to extend this mechanism."
The EC plans to continue developing its VAT system with the
launch of the definitive regime next year. The only impediment
to this is member states themselves – handing over tax
sovereignty is a sensitive issue at the best of times, but
particularly so in the face of growing Euroscepticism.
"We have to convince member states, especially concerning
cooperation between them," said Raponi. "If we implement the
one-stop shop, etc, if we also want to implement the definitive
regime, we need more cooperation between member states,
especially fighting fraud."
"From our point of view we are lacking this administrative
cooperation. Taking into account the size of the market
– the trade in the EU is €3 trillion –
if you see how administrative cooperation is working, we think
we have to improve a lot."
When the Commission presented its VAT Action Plan, it also
presented an attached list of 20 actions for improving
administrative cooperation between member states. "This is
important, this is a key issue for the mini one-stop shop, it
is also a key issue for the definitive regime," Raponi
Another area where the VAT unit's work could have a dramatic
influence in the future is, surprisingly, direct taxation. The
EU's appetite for a consolidated corporate tax base is being
resurrected, and Raponi feels the experience and technical
know-how gained in the VAT changes could be of use. "I think
that the mechanism of one-stop shop could be used in different
domains, especially in direct taxation also," he said. "This is
one where we have to examine the possibilities."
Having one of the member states, where a business is
established, collect tax on behalf of the other member state,
where the consumer resides, is a concept that is working in
VAT, and it is "simplifying the life of the business", said
Raponi. "This concept should be enlarged, it's the reason why
we are enlarging progressively, step by step. We started with
the supply of services, now we are enlarging to the supply of
B2C goods, and then with the definitive regime, we will also
use the one-stop shop for B2B transactions."
"So this is a scheme which could be enlarged in different
domains of taxation."