VAT in the digital age, summary of EU published legislative proposals

On the 8th of December, the European Commission published two long awaited proposals as part of its legislative package ‘VAT rules for the digital age’. A project intended to modernize and simplify the EU VAT system.

This package has three main objectives:

  1. Modernising VAT reporting obligations by introducing digital reporting requirements, which will standardize the information that needs to be submitted electronically by taxable persons on each transaction to the tax authorities. In addition imposing the use of eInvoicing for cross-border transactions. This will as well eliminate barriers for member states to introduce mandatory eInvoicing systems as today they need to obtain a derogation to be able to introduce digital reporting requirements based on mandatory eInvoicing. The eInvoicing model proposed is without clearance and member States have util 2028 to fully adopt the harmonised requirements.
  2. Clarifying the place of supply rules to better address the challenges of the platform economy, enhancing the role of the platform in the collection of VAT for facilitating supplies of short-term accommodation, rental, or passenger transport services. Done by a deemed supplier model, by which the platforms will account for VAT on the underlying supply. In addition clarifications will be provided for a uniform treatment of the facilitation service by the platform and harmonise the transmission of information from the platform to the Member States.
  3. Avoiding the need for multiple VAT registrations in the EU by introducing Single EU VAT Registration (SVR) and improving existing One-Stop Shop (OSS and the Import OSS) systems to minimize instances where registration in another Member state is required.

These proposals are a big step towards digitizing the current reporting system. There will be more emphasis on transactional based reporting and a central system for the exchange of VAT information (phasing out the legacy VIES system) will be introduced.

Below we have summed up the most impactful changes to the current VAT reporting obligations which these proposals seek to enact.

  • Amendment of article 218 of the VAT Directive. eInvoicing will be the default system for the issuance of invoices. Using the standardized EU digital reporting system will be mandatory in 2028.
  • The deadline for issuance eInvoices for intra-community supplies of goods and services that are subject to a reverse charge is two days after the chargeable event took place.
  • The deadline for digital reporting of intra Community transactions will be 2 days after issuance of the invoice or when the invoice should have been issued.
  • Repeal of article 223 of the VAT Directive, which meant he elimination of the possibility to issue summary invoices.
  • New invoice requirements in article 226.
  • It will be mandatory to report payment data related to each individual invoice, as well references to earlier amended invoices.
  • Abolishing the system of recapitalize statements which will require member states to request more information for each cross-border transaction through DRR.
  • Member states will be allowed to establish additional real-time reporting systems for transactions to private individuals or domestic transactions but based on the common reporting system.
  • Extension of the definition of intra Community distance sales of goods to cover second-hand goods, works of art, collectors items and antiques.
  • Discontinuation of the call off stock simplifications as from 31-12-2025 as those can be covered under OSS.

Please make sure to follow our news items for more information about the digitization of VAT reporting in the EU and how Pincvision is able to assist you with these invoicing and reporting requirements.

09 Dec 2022 at 12:55 pm
4 min
Published by:
Laurens van de Leur
Sr. VAT Compliance Specialist
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