On 08.12.2022, the European Commission proposed a package of measures "VAT in the digital age (ViDA)" to modernise VAT in order to make the EU VAT system more efficient for businesses and more fraud-resistant by promoting digitisation.
With its proposals, in particular to amend the VATyst Directive and the VAT Implementing Regulation, the Commission aims to address the discrepancy between the 30-year-old VAT rules and the current digital reality.
What is ViDA about?
The draft directive provides for three key areas of action ("pillars"):
- the extension of electronic invoicing, as well as the introduction of digital reporting obligations
- the concept of a single VAT registration to avoid a multitude of local registrations in the member states, and
- the extension of the supply chain fiction for online marketplaces involved in the short-term rental of accommodation or the provision of passenger transport services.
What does this mean?
Through the introduction of digital reporting obligations towards the tax authorities as well as the expansion of electronic invoicing, a modernisation of VAT reporting obligations is to take place in gradual steps over time. Up to now, the issuing of electronic invoices has been dependent on the acceptance of the recipient. From 2024, Member States may provide that invoices are to be issued electronically, while from 2028 electronic invoicing is to be the standard and the use of paper invoices only the exception. According to the proposals, from 2028, invoices for intra-Community supplies and other cross-border B2B transactions subject to the reverse charge should be issued within two working days of the transaction.
Also from 2028, the recapitulative statement in its current form is to be replaced. For intra-Community supplies, intra-Community acquisitions and other cross-border B2B transactions subject to the reverse charge, a corresponding electronic report is to be submitted to the tax authorities within a further two working days after invoicing.
The necessity of multiple registrations under VAT law is to be avoided within the EU. The goal of a so-called one-stop VAT registration is to be approached through an expansion of the existing one-stop reporting systems (OSS and IOSS) combined with the expansion of the so-called reverse-charge procedure. These changes are to apply from 2025 and are also intended, among other things, to enable compliance with the reporting obligations in view of the Europe-wide consignment warehouse regulation of Art. 17a VAT Directive (or § 6b UStG) expiring on 31.12.2025.
The requirements for the so-called (internet) platform economy will be updated with regard to the determination of the location of transactions and the increased inclusion of platforms in VAT collection in the area of short-term rental of accommodation or the provision of passenger transport services. For this purpose, from 2025 onwards, a tax-exempt supply by the service provider to the operator of the electronic interface would be fictitious and at the same time a corresponding supply of services by the interface operator to the customer would be assumed. This turnover would then be regarded as taxable and the interface operator would have to invoice the customer for the turnover tax.
