PricewaterhouseCoopers LLPFebruary 2010

Chamber of Russian Tax Advisers 10th Anniversary Conference

How to use the Commission to win your case

2 February 2012

Stephen ColecloughPresident CFE

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Agenda

Role of the Commission• The Commission’s agenda for the next 2 years

− EU financial crisis – Financial Transactions Tax (FTT)− Energy Taxation (CO2 reduction)− VAT White Paper / VAT fraud − Financial services− Lisbon Agenda

• Working with the Commission

First International Indirect Tax Conference – February 2012

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Working with the Commission

• Background

• Issues

• What you can do

First International Indirect Tax Conference – February 2012

Background

Pre 1996:

- VAT single harmonised tax uniformly applied in every member state

SLIM report

- 125 areas of discretion - Mistranslations e.g. Art 13.A.1.f and factoring in English,

consultant in Art 9.2.e in Spanish - Interpretations- Local law (e.g. factoring)- Local administrative practice

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First International Indirect Tax Conference – February 2012

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First International Indirect Tax Conference – February 2012

Rabbits

Common problems

• Two member states claim VAT on the same transaction (place of supply)

• Failure to refund VAT to ‘foreigners’

• Failure to refund VAT in a timely fashion

• Disproportionate administrative, security or penalty obligations

• Non-compliance by member state

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First International Indirect Tax Conference – February 2012

Usual response to common problems

• Appeal to local court and possibly seek referrals (some countries have notably few referrals)

• Do not do the business!

• Do something else

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First International Indirect Tax Conference – February 2012

A European approach

• Commission very keen to hear of cases

• Soft law – Commission statements (a veiled threat to non-compliant states)

• Infraction powers

• Peer pressure – the role of studies, academics and reports

• VAT Committee ‘orientations’

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First International Indirect Tax Conference – February 2012

Complaints

Making a complaint

- Obliged to investigate- Anonymous or named- Facts- Face to face- Pilot procedure

Complaints

- Low cost but not fast- Run in conjunction with local processes - Usually good results

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First International Indirect Tax Conference – February 2012

Complaints process

• Commission writes to Ministry of Finance

• Ministry invites to relevant head of VAT department

• Head of VAT telephones district/area controller

• Area controller shouts at your inspector!

• Ministry to reply in 6 months with an explanation

- disagree, i.e. not what we do- misunderstanding - agree they do that but justify

• Commission considers response and if it believes there is a case to ask for a reasoned opinion from Member State (e.g. VAT grouping)

• Ultimately off the ECJ

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First International Indirect Tax Conference – February 2012

Results from these approaches

• High degree of success in a non adversarial manner

• Build strong relationships with the Commission

• Positive effect on other points of your business

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First International Indirect Tax Conference – February 2012

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Any Questions?

First International Indirect Tax Conference – February 2012