Value Added Tax as a Tool for European Convergence: Fiscal Neutrality and the Common Framework of the Single Market

Abstract

This article examines value added tax as a legal and economic mechanism of European convergence, with particular reference to the prospective alignment of the Republic of Moldova with the Union acquis in the field of VAT. The central argument is that VAT harmonisation is not a merely technical revision of tax rates, but a structural reconfiguration of legal concepts, business processes, administrative interoperability and fiscal neutrality. The paper combines doctrinal legal analysis, comparative interpretation, functional process analysis and policy-oriented assessment. The results show that the decisive shift concerns the transition from a national model dominated by domestic supplies and imports to a Single Market model built around taxable person status, the destination principle, intra-Community transactions, place-of-supply rules, deduction and refund rights, and digital reporting. The study further demonstrates that approximation to Directive 2006/112/EC and the ViDA package can generate tangible advantages for Moldova: lower embedded tax in investment, stronger liquidity through broader VAT recovery, the disappearance of VAT-at-customs on acquisitions from the European Union, and the repositioning of the State Tax Service inside the European cooperation architecture through CCN, VIES, VAT Refund, VAT REG, OSS and CESOP. The article concludes that VAT should be understood as a governance instrument of market integration and that successful convergence depends on coherent recodification, digital interoperability and timely business preparedness. UDC: [336.02:061.1EU]:336.226.322(478); JEL: H25, H26, F15, K34, O38