The European Commission has extended the pilot project aimed at improving legal certainty for SMEs in their cross-border VAT transactions for another year until 31 December 2014.

The scheme was originally set to end on 31 December 2013.

The UK is among 14 EU countries taking part in the pilot project, which began on 1 June 2013, to allow participating EU member states to arbitrate cross-border VAT transaction disputes between themselves.

The proposed introduction of cross-border rulings will allow taxable persons planning cross-border transactions to one or more participating member states to request a ruling in the participating member state where they are registered for VAT purposes, with regard to the transactions they envisage.

A mid-term review of the experiment will be made in June 2014 and if the results are positive, the EC may recommend further development of this practice.

The 14 participating member states are Belgium, Estonia, Spain, France, Cyprus, Lithuania, Latvia, Malta, Hungary, Netherlands, Portugal, Slovenia, Finland and the UK.