ECON votes for 1-year delay to 3-pillar EU VAT in the Digital Age reforms
15 Nov 2023 update: EU ViDA delay to political agreement until 2024.
This week, the EU Parliament’s Committee on Economic and Monetary Affairs (ECON) voted on and approved a report proposing a 1-year delay to most of the elements of the European Commission’s (EC) VAT in the Digital Age reforms. The vote is non-binding on the proposals, which due to be voted on by EU Finance Ministers in December.
ECON was in broad support of the EC’s aim for ViDA to combat fraud and make EU VAT compliance simpler. ECON proposes the delay to give businesses more time to prepare. The highlights of ECON’s recommended changes to ViDA include:
- 1-year delay to all 3 pillars of the reforms (Single VAT registration; Digital Platforms; and E-invoicing), potentially with the exception of the 2028 Digital Reporting Requirements
- Extending the 2-day proposed reporting timeframe on digital reporting (DRR) to 8 days. This covers reporting to tax authorities of intra-community supplies only from 2028
- Modifying the EC’s proposed definitions of e-invoicing; including the use of PDF invoices until January 2028;
- Allowing the continued use of paper invoices until Jan 2028 by member states;
- Adopting e-invoicing before Jan 2028 will still require the consent of the purchaser;
- Summary invoices will continue (the EU proposal had looked to withdraw their use)
- Removal of the bank account identifier (= IBAN account) and payment date due to security and confidentiality risks.
Pilar 2 – platform economy
- 1 year delay on deemed supplier for home and ride sharing deemed supplier. So 2026 instead of 2025;
- Exemption for SME platforms from deemed supplier obligations
- The rental threshold for short-stay accommodation has been reduced from 45 days to 31 nights for the new obligations of the reputed supplier and the supply of 3 or more important ancillary services when renting out the said accommodation; and
- The second-hand goods regime has been retained.
Pilar 3 – Single VAT registration
- No major changes outside potential 1-year delay
18 July 2023 – ECON considers report to delay ViDA.
ECON had earlier been reviewing a 2-year delay to give member state tax authorities and taxpayers time to prepare.
The EU Parliament has proposed over 250 changes to the European Commission’s (EC) ViDA reforms. The major suggestions, which are advisory only, include:
- Delay of one year to many reforms. The major Digital Reporting Requirements reforms are scheduled for 2028;
- Allowing member states to continue in full with their own domestic VAT pre-clearance regimes. The EC is proposing compelling member states to fully harmonise to the EU proposals by 2028;
- Extending the proposed 2-day digital reporting transaction reporting requirement;
- Making the adoption of EN 16931 structured e-invoice as optional only – instead of the proposed mandate proposal for 2028.
- Securing that the data from the “central VIES” is accessible in a secure and confidential manner;
- For the digital platform reforms in 2028, extending the proposed threshold of 45 days of uninterrupted rental of accommodation to regard it as equal to a hotel service;
The Committee on Economic and Monetary Affairs (ECON) is a committee of the European Parliament which is responsible for the regulation of financial services, the free movement of capital and payments, taxation and competition policies, oversight of the European Central Bank, and the international financial system.
EU VAT in the Digital Age reforms
|EU VAT in the Digital Age|
|3 pillars to improve efficiency of VAT for all and reduce fraud|
|1. Digital Reporting Requirements; e-invoicing||2030?: Mandatory digital reporting of intra-community transactions; obligation to be able to issue and receive intra-community e-invoices; member states free to impose own e-invoicing or real-time reporting but most conform to EU e-invoice standard EN 16931|
|Read more about EU Digital Reporting Requirements (DRR)|
|Structured e-invoices mandated for intra-community supplies|
|EC Sales lists replaced by Digital Reporting Requirements|
|Withdrawal of EU permission requirements for e-invoicing|
|2 Platform economy||2025: Travel & accommodation sharing platforms to become deemed supplier / liable to users' VAT. New definitions of the roles of providers, users and platforms to avoid double and no-taxation|
|Read more - Travel & accommodation platforms deemed suppliers for EU VAT|
|3 Single VAT Registration; extension of OSS||2025: Following the 1 July 2021 introduction of the One Stop-Shop (OSS), extended to cover movement of own stocks prior to cross-border B2C to reduce the foreign, non-resident VAT registrations & returns. Plus to movements of own stock with ending of 'call-off' stock burden|
|More details on Single VAT Registration in the EU|
|Marketplaces deemed supplier for EU sellers|
|EU IOSS mandated for marketplaces|
|EU tackles misuse of IOSS numbers|
|Quick fixes to existing e-commerce VAT rules|
|Call-off stock VAT simplification ends|
|Harmonisation of B2B Reverse Charge rules|