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EU Parliament backs harmonised e-invoicing and definitive VAT system

Anti-VAT fraud initiatives get Parliament vote

The European Parliament voted on 16 February 2022 in favour of harmonising pan-EU e-invoicing and supporting the adoption of the definitive VAT system reform to:

  • facilitate cross-border interoperability;
  • ensure legal compliance;
  • increase transparency in commercial transactions; and
  • limit fraud and errors.

The Parliament acknowledged that member states are already adopting various forms of e-invoicing and live reporting. But that this should be coordinate to promote ease of adoption by businesses and efficient exchange of tax data.  Any parliamentary vote is non-binding on member states of the EU.

Other measures backed by Parliament tied to the 2019 EU Tax Action Plan and EU VAT reforms:

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Switch to definitive VAT system

The Parliament restated its support for the reforms of the current ‘temporary’ origin-based VAT rules for B2B goods transaction. This was open to criminal fraudsters using the zero-rating intra-community supply process to collect billions in VAT.  And creates complexity and costs for law-abiding businesses. The 2018 draft definitive VAT regime proposes to move to a destination-based model, supported by easier ways to report and remit that VAT.  However, many member states have objections to the proposal which is effectively blocked.

EU digital reporting requirements proposals

EU VAT in the Digital Age reforms include a channel for harmonised Digital Reporting Requirements (DRR) and  Continuous Transaction Controls (CTC)

by EU states. This grew from the 2020 EU Tax Action Plan  proposals for a fairer and more efficient EU tax regime.

EU VAT reforms

Reform (click for details) Update
2025 VAT registration thresholds equivalence foreign businesses On track
Virtual events VAT rule changes Agreed
2024 Payment providers' seller transaction reporting and bookkeeping obligations On track
Digital Reporting Requirements (DRR), e-invoicing and live transaction reporting Implementation of VAT in the Digital Age?
2023 DAC 7 - marketplace reporting obligations on sellers' activities On track
Financial Services VAT exemption reform proposals Consultation complete; proposal 2023
Tour operator margin scheme VAT reforms EC undertaking fresh review
2022 EU definitive VAT system Member states not agreed on format
EU reduced VAT rate freedoms Enter into force 6 April 2022
IOSS reforms to prevent double taxation Proposals early 2022
VAT in the Digital Age proposals On track for Q3 2022 detailed proposal
Single EU VAT registration - extension of OSS for B2B and B2C On track for Q3 2022 detailed proposal
Proposal for VAT treatment of the platform economy On track for Q3 2022 detailed proposal
VAT Gap Initiative Q3 2022
2021 One-Stop-Shop (OSS) single EU VAT return In effect
Ending €22 import VAT exemption; new IOSS return In effect
Marketplace deemed supplier EU VAT reforms In effect
2020 EU four Quick Fixes for VAT In effect
Tax authorities anti-VAT fraud cooperation In effect
Tax Action Plan - 25 VAT and other tax reforms roadmap See 'VAT in the Digital Age' and others
2019 Simplification of e-services VAT compliance and thresholds In effect
Single and multi-use vouchers In effect
2018 Lower e-book and publications VAT rates In effect, although not all EU states have adopted the option
EU Generalised Domestic Reverse Charge VAT Mechanism In effect, although no country has adopted this voluntary option
2015 B2C electronic services VAT reforms - MOSS return In effect

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