Interoperability becoming the concern in latest draft Explanatory Notes
The European Commission’s latest discussions on the VAT in the Digital Age Pillar 1, Digital Reporting Requirements (DRR) reveal an important shift to how the rules can be implemented consistently across all Member States.
With the 27 member states responsible to developing national processes for e-reporting capture and postings, it’s clear deviation and cross-border reporting will be variable undermining interoperability.
Third draft Explanatory Notes to be finalised early 2027
A recurring theme throughout the discussions was the need to ensure that national implementations remain interoperable.
Businesses called for clearer guidance on:
- how electronic invoices should be transmitted;
- the responsibilities of Member States; and
- how interoperability requirements should be applied in practice.
Businesses are also urging the Commission to publish implementation best practices and encourage Member States to involve software providers, businesses and other stakeholders early in national rollout programmes.
This reflects growing concern that, without sufficient coordination, Member States could implement the same ViDA legislation in different ways, increasing complexity for businesses trading across borders.
Technical questions on e-reporting remain
Businesses are also seeking further clarification on several operational issues, including:
- Reporting by VAT groups using a single group VAT number;
- Treatment of corrected invoices;
- The distinction between invoice issuance, transmission and receipt;
- Reporting VAT rates and VAT amounts;
- The meaning of “real-time” reporting;
- Handling invoices containing multiple currencies; and
- The treatment of hybrid invoices, attachments and extensions while maintaining compliance with the European standard.
The EC is looking to complete the Explanatory Notes by the start of 2027, and there may well be a fourth draft in the Autumn this year.
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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 | Jul 2030-35: 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 | |
| 10-day e-invoicing deadline for intra-community sales | |
| 5-day e-reporting time limit intra-community purchases | |
| Withdrawal of EU permission requirements for e-invoicing | |
| Central VIES database launch | |
| 2 Platform economy | Jul 2028 / Jan 2030: 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 (voluntary Jul 2028) |
| Read more - Travel & accommodation platforms deemed suppliers for EU VAT | |
| 3 Single VAT Registration; extension of OSS | July 2028: 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 |
| January 2027 initial changes | |
| Transfer of own goods OSS extension | |
| Call-off stock VAT simplification ends | |
| Harmonisation of B2B Reverse Charge rules | |
| Creation of Single VAT Registration identiy | |
| Securing IOSS (Mar 2028) | |
