Preventing Double Taxation Through Administrative Cooperation in VAT

Sammanfattning: This paper analyses the role of administrative cooperation in the European VAT system. It examines, to what extent Regulation 904/2010 obliges Member States to prevent double taxation issues in VAT and how the system of administrative cooperation could be amended to ensure a correct assessment of VAT taking into account other resolution mechanisms. The supporting role administrative cooperation has to the VAT Directive necessarily implies its duty to prevent double taxation issues, especially having regard to the aim of establishing an internal market and ensuring coherence with the principle of neutrality. The current system generally allows for an exchange of information between Member States but does not impose an obligation for the tax administrations to come to an agreement concerning the place of supply of a transaction. This is confirmed in the judgements WebMindLicenses and KrakVet of the European Court of Justice. An analysis of the applicable resolution mechanisms in VAT shows the need for a comprehensive tool that provides legal certainty for the taxpayer. The author establishes, that in theory, the framework of administrative cooperation provides for the right prerequisites to serve as a resolution mechanism for double taxation. On the basis of these findings, the paper presents several proposals to improve the scope of administrative cooperation. This includes the introduction of a broader scope of automatic exchange as well as the dialogue between tax administrations. Those measures could strengthen cooperation and trust between Member States, establishing a unified resolution mechanism for double taxation. The proposals are supported by the introduction of a consolidated European VAT administration which uses the analysis of big data and centralized resources to advance the efficiency of administrative cooperation in the European Union.