Making the VAT cross-border ruling pilot a success by Stephen Dale

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Stephen Dale is an indirect tax expert based in Paris who was asked by Ann to share some of his insights on VAT.  

In June 2013, the EU VAT Forum, of which Stephen is a member, set up by the Commission in July 2012 to bring together VAT authorities and business, launched the VAT cross-border ruling (‘CBR’) pilot project. The project enables business to obtain a degree of certainty as to how VAT will apply to ‘complex’ supplies across Member States. By June 2014, 15 Member States had joined the CBR pilot: Belgium, Estonia, Spain, France, Cyprus, Latvia, Lithuania, Malta, Hungary, Netherlands, Portugal, Slovenia, Finland, Sweden and the UK.

The CBR pilot will run to the end of 2014. Take-up has so far been relatively low. Those taking part ‘expressed positive views regarding the handling of the first CBR cases. They also acknowledged the need to give more visibility to this project in order to raise more awareness among business, in particular SMEs. The participating Member States and the business representatives also expressed the wish that more – or even all – Member States become involved in this initiative.’

Obtaining a CBR

A request is filed with the tax authorities in the participating Member State where the person making the request is VAT-registered and must comply with the conditions for national VAT rulings. Where two or more persons are involved, the request should be by one of them acting on behalf of the others.

The request must be accompanied by a translation into the official language of the other Member State(s) concerned, or by another translation into a language which that Member State will accept as set down in the Information Notice.

Why has the CBR project not been a great success so far?

A number of possible explanations for the low take-up are set out in the mid-term review report from the Commission of June 2014 on the functioning of the CBR and the associated Information Notice.  These include:

  1. Data provided in a CBR request may be shared by the tax authorities of the Member States concerned.
  2. Consultations between the competent authorities of the Member States concerned will only take place if this is requested explicitly by the taxable person making the CBR request. Consultation does not guarantee that a CBR can be delivered as the Member States involved may not agree. The Commission has indicated – subject to available agenda time – an intention to raise cases where the Member States cannot agree with the VAT Committee under article 398 of directive 2006/112/EC.
  3. CBRs will only be given under the same conditions as national rulings and decisions. This means that if in a Member State ‘ruling’ is not binding then nor will a CBR be.
  4. No CBR will be given where the person concerned is being audited
  5. The time limits for responding to a CBR request are those applying to national rulings. This means that the process can be lengthy.
  6. Not all Member States participate in the CBR project.

What types of CBR request have been made to date?

It appears from Annex 2 to the Interim Report that CBRs requested so far have involved:

  • training courses/conferences
  • sales of SIM cards and ‘top ups’
  • repairs to property
  • separate supplies of machinery and tyres

Next steps

A meeting is to be organised at the end of the CBR project test period to discuss the following issues:

  • how to continue the project (assuming that it is continued)
  • involving other Member States
  • differences in Member States’ treatment of CBR requests, as a result of national ruling conditions
  • timescales for CBR requests and replies


The EU VAT Forum is pushing hard for the CBR project to be developed further, and for the issues identified above which are currently limiting its development to be dealt with.

One could imagine, in an ideal world, a system whereby, as for customs duty valuation questions or classification issues, a database is built accessible to business and Member States alike, containing a number of issues and their resolution, and binding on tax authorities which would enable businesses to expand outside their own Member State with certainty as to how their transactions will be treated for VAT purposes. This must be good news for business and for the EU economy as a whole and, as was said in an article in International Tax Review in November 2013:

‘The CBR test case is an historic EU development that offers something new, exciting and important – a platform for expanding the boundaries of communication, collaboration and coordination and for reducing the margins of uncertainty – a win both for business and for Member States’.

It would be interesting to hear feedback from VAT practitioners on why they feel the CBR project has not made more of an impact and what currently prevents them from using it.

Stephen Dale is the Partner in charge of Indirect Taxes at Landwell & Associés, law firm, member of the PwC international network, of which each member is a separate legal entity.

*** UPDATE – April 2015***

The CBR pilot has been extended and will now run until 30 September 2018.

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