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 B2C own stock movements||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|
|2. Digital Reporting Requirements; e-invoicing||2028: 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)|
|E-invoices mandated intra-community supplies 2028|
|EC Sales lists replaced by Digital Reporting Requirements|
|2014 EU legal permissions for e-invoicing lifted|
|3. VAT treatment of the 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|
|Contact us to learn how VATCalc's single global platform for determination, reporting and e-invoicing can help you thrive with VAT in the Digital Age|