These different factors explain the almost total absence of VAT neutrality. But, we can tend towards this principle by acting on the rates. Indeed, broadening the tax base and reducing their number would make it possible to strengthen its efficiency and neutrality.
Aspect of Reduction
Likewise, a reduction in the number of exemptions, combined with a reduction in rates, would avoid collecting a lot and having to return a good part of it.
- Obviously, the question is much more complex. This supposes an empirical study on the basis of verifiable figures in order to identify the dysfunctions and to think about concrete, measurable and above all more stable solutions.
- However and as a priority, we must focus on the two previous reforms, the first initiated in 2005 and the second in 2013, to establish a diagnosis and analyze the causes and constraints that did not allow them to be completed.
Moreover, a simple question: what does VAT really yield to the state budget, if we deduct reimbursements and the amount of its tax expenditures?
A reform is also the choice of an approach: should we plan a global overhaul or act gradually? This will depend on the ability to assess the impact on the economy and on the level of tax revenue. Use of the business calculator is essential there.
Taxation is not a theatrical subject which allows improvisation on its stage
VAT is a tax whose collection mechanisms may seem relatively simple. In practice, however, we see that this tax raises many questions that are a real concern for businesses. This concern intensifies when the VAT is governed by the rules of the European Union and it is regularly subject to significant changes. The numerous judgments handed down by the Court of Justice of the European Communities, which regularly arbitrates the interpretations of national laws, further complicate the subject.
In Luxembourg, the introduction of new VAT measures since January 1, 2017 (increase in VAT penalties, introduction of the personal and joint liability of directors, managers and directors de jure and de facto of companies subject to VAT) underlines the importance of constantly respecting the rules established by Luxembourg VAT law. In particular, it is important that all those liable for VAT, whether in the financial or non-financial sector, have sufficient comfort with the VAT treatment applied to their operations (charges and income).
In order to understand the risks and opportunities associated with the application of VAT rules, PwC’s Academy is pleased to offer you this training which alternates theoretical content with practical exercise workshops, oriented for the financial sector and for the non-financial sector.
At the end of this training, participants will be able to:
- use a rigorous methodology to determine the VAT treatment of a basic transaction, limiting the risk of error
- explain the rules applicable to the VAT deduction mechanism
- identify the risks and opportunities in terms of VAT in specific situations
- complete a VAT declaration and correctly fill in the input and output VAT
- have a good knowledge of the VAT reporting obligations, the applicable accounting requirements and the procedures to be followed vis-à-vis the Administration of Registration and Domains