EU Vat reforms will harm all exporting firms

In a move to modernise the cross-border regime for collecting sales taxes, the European Commission has proposed extensive reform of the sales tax Vat system, which could have an unintended consequence for Ireland’s export industry.

The plan is a blunt instrument which on the one hand will enable tax authorities across the EU to collect an estimated additional €150bn lost through fraud, tax evasion, and miscalculations. However, it will also reduce the cashflow and increase the red tape for all types of exporting firms.

In Ireland’s case, the commission estimates that under the new system the tax authorities here could collect an additional €1.5bn a year.