Spring public consultation backs EU VAT reforms and harmonisations with limits
The EU published submissions and summaries of its Spring 2022 public consultation on EU VAT in the Digital Age reforms. The European Commission is expected to conclude on reforms under the three reform strands shortly, and publish VAT Directive Amendments in October.
Key issues raised in the 193 public submissions included:
Single VAT registration in the EU (extension of OSS)
- Respondents were highly positive of the benefits of the new OSS and IOSS returns introduced in the e-commerce VAT package in July 2021. This they believed reduced the number of foreign VAT registrations and associated compliance costs.
- They backed the extension of OSS to more cross-border B2C transactions and certain B2B supplies, too. The strongest agreement among stakeholders was for the option to extend the OSS to cover all B2C supplies of goods and services by non-established suppliers
- More than half of answers indicated that they agree also with the options of making reverse charge available for all B2B supplies carried out by non-established suppliers, and with removing the EURO 150 threshold for IOSS.
- The options of making the IOSS mandatory either for all distance sales of goods above a certain threshold or for marketplaces only did not find agreement among a majority of responding stakeholders.
- Vast majority of respondents felt fragmented e-invoicing requirements, generating inflated costs for cross-border trading
- Over two-thirds of respondent perceived to a large extent that EU action is necessary in ensuring a more widespread adoption of digital reporting and e-invoicing requirements.
- The majority of respondents backed the partial harmonisation approach, with only a intra-community transaction model being adopted at first for digital reporting and e-invoicing.
- The responses to the harmonisation of data sets, and whether governments should settle for a limited invoice data set were less conclusive
- Respondents highlighted the challenges of separating the role of players and business models in determining who and how VAT responsibilities can be determined. Particularly problems concerning the definition of supplies, the status of the supplier and customer, and the place of supply. This presents legal definition challenges.
- Respondents were unclear on ensuring a level-playing field for traditional vs platform economy players.
- Predictably, a deemed supplier role for digital platforms may create difficulties for platforms, a burden which might be unreasonable for smaller or purely domestic platforms which may choose to shift the burden towards their users by imposing strict conditions and requirements.
EU VAT in the Digital Age reforms
|EU VAT in the Digital Age|
|3 reforms to improve efficiency of VAT for all and reduce fraud|
|1. Single VAT registration in the EU; extension of OSS to all B2C and certain B2B||Following the 1 July 2021 introduction of the One Stop-Shop (OSS), can this be extended to cover further cross-border B2C and all / any B2B transactions (e.g. movement of own stock across borders) to reduce the foreign, non-resident VAT registrations and returns burden|
|More details on Single VAT Registration in the EU|
|2. Digital Reporting Requirements; e-invoicing||What options are there to harmonise the digitisation of transaction reporting amongst the member states. The EU is looking at: Continuous Transaction Control (CTC) e-invoicing, live reporting; or Periodic Transaction Controls (PTC) invoice listings. Also if at a country, EU or hybrid-level.|
|Read more about EU Digital Reporting Requirements (DRR)|
|3. VAT treatment of the platform economy||How can EU member states adapt their tax systems to reflect the new role taken on by Electronic Interfaces - platforms and marketplaces which have enabled millions of private individuals to provide services and goods for the first time. How should the VAT Directive be modified to capture the new dynamics created in the gig and sharing economies, including imposing full deemed supplier VAT obligations on platforms as with 2021 e-commerce package for goods.|
|EU VAT Treatment of Platform Economy update|