Peter Navarro called the EU to give up VAT and allow the sale of American corn and meat (today there is a blockage). What do tax experts say?
According to Adam Bartosiewicz, tax advisor, legal advisor, prof. University of Jan Długosz in Częstochowa and a partner in Gardens Tax & Legal, one should not expect that the EU is seriously considering the possibility of lifting VAT.
– First of all, this tax is the most serious source of tax revenues of the Member States – says Adam Bartosiewicz.
VAT revenues in Poland constitute nearly half of all tax revenues of the state budget. In 2024, the state budget revenues amounted to approx. PLN 623.4 billion, from this VAT was received by PLN 287.7 billion. Therefore, EU countries cannot give up such tax revenues.
Secondly – adds Adam Bartosiewicz – VAT is a tool necessary for the functioning of the common EU market of goods and services.
Daniel Więckowski, a tax advisor, LTCA managing partner, also points out that due to the enormous US military involvement in Europe, there are many international agreements that guarantee the possibility of using a rate of 0 percent. VAT for supplies for the US Army. – From such benefits, other countries from outside the EU do not use – emphasizes Daniel Więckowski.
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There is also a VAT -like tax in the USA and Canada
Nay, There is also a similar VAT tax in the USA, such as Sales Taxi.e. sales tax. The main difference is that VAT is a tax calculated at every stage of trading, and the American Sales Tax only at the time of selling the final recipient, usually to the consumer.
– Donald Trump's problem is largely ignorant. A pity, because the northern neighbor of the USA, i.e. Canada, successfully implemented in part of its states such a trade tax model as VAT – notes Daniel Więckowski.
However, the LTCa expert adds, from a practical point of view, companies from the US operating in the EU have “harder” on the European market.
Is VAT a barrier to American companies in the EU?
As Adam Bartosiewicz says, comparing VAT with customs is unjustified. – Yes, entrepreneurs from countries where VAT does not operate, selling their goods to the EU market, must take into account that their products for EU consumers will become more expensive about VAT, but EU entrepreneurs face the same challenge – notes prof. Bartosiewicz.
Daniel Więckowski adds that American companies (and not only) can use the “tax representative”, i.e. the VAT settlement service, which – as the expert admits – is not cheap.
– Additionally, If a US company only buys goods in the European Union, it is not possible to recover VAT paid at the gross price. In this case, due to the lack of “reciprocity principle”, the direct return is excluded – explains Daniel Więckowski.
Daniel Więckowski, however, emphasizes that VAT is not an obstacle to trade between the EU and the USA. – At the request of the abolition of VAT in the Union, I suggest you answer the demand to transfer the US capital to Chicago. The impact on goods exchange will be the same – comments the expert.
