Application of VAT on intracommunity supplies of goods and services and its potential improvements

Elizaveta Shmeleva

Master's thesis

Abstract:

The creation of the single market in the European Union facilitated the process of trade among the Member States, however, it brought the opportunity for the participants of trade market to find ways to avoid Value-Added Tax on intra-community transactions. This issue makes the government doubt the reliability of the current VAT system in EU as the gap between the VAT expect and actual revenue, nowadays, is about €150mil. This thesis focuses on the possible solutions regarding abovementioned problem. The studies of the European Commission, audit firms and different authors were used to get the information.The application of the reverse-charge mechanism would be the best solution for European Union to tackle the fraud in comparison with the definitive system or current VAT system with improvements, this conclusion was made based on the several factors, such as anti-fraud effect, impact on SMEs, macroeconomic effect and costs that would occur.

Abstract:

The creation of the single market in the European Union facilitated the process of trade among the Member States, however, it brought the opportunity for the participants of trade market to find ways to avoid Value-Added Tax on intra-community transactions. This issue makes the government doubt the reliability of the current VAT system in EU as the gap between the VAT expect and actual revenue, nowadays, is about €150mil. This thesis focuses on the possible solutions regarding abovementioned problem. The studies of the European Commission, audit firms and different authors were used to get the information.The application of the reverse-charge mechanism would be the best solution for European Union to tackle the fraud in comparison with the definitive system or current VAT system with improvements, this conclusion was made based on the several factors, such as anti-fraud effect, impact on SMEs, macroeconomic effect and costs that would occur.

Keywords

VAT system, fraud, Intra-Community transaction, Value-Added Tax

Keywords

Value-Added Tax, fraud, VAT system, Intra-Community transaction

Language used: English

Date on which the thesis was submitted / produced: 17. 10. 2018

Thesis defence

• Date of defence: 11. 6. 2019
• Supervisor: Hana Zídková
• Reader: Jana Tepperová

Vysoká škola ekonomická v Praze

Master programme:
Finance and Accounting