Unofficial translation below:
Government letter U 103 /2022 vp
Petition of the Government to Parliament on proposals for Council directives and regulations (modernization of value added taxation in the digital age)
On the basis of Section 96(2) of the Constitution, the proposals made by the European Commission on December 8, 2022 for a Council Directive amending Directive 2006/112/EC regarding the value added tax rules in the digital age, for a Council Implementing Regulation amending Implementing Regulation (EU) 282/2011 regarding information requirements for certain VAT systems, and the Council as a regulation on the amendment of Regulation (EU) 904/2010 regarding the administrative cooperation arrangements for value added taxation needed in the digital age, and a memorandum prepared on the proposals.
MEMORANDUMTREASURY11/01/2023EU/1531/2022EU/1532/2022EU/1533/2022PROPOSALS FOR THE MODERNIZATION OF VALUE ADDED TAXATION IN THE DIGITAL AGE
On 8 December 2022, the Commission issued the following proposals to modernize VAT in the digital age:
– proposal for a Council Directive amending Directive 2006/112/EC with regard to VAT rules in the digital age, COM(2022) 701;
– proposal for a Council Implementing Regulation amending Implementing Regulation (EU) 282/2011 as regards certain information requirements for VAT systems, COM(2022) 704, and;
– proposal for a Council Regulation amending Regulation (EU) 904/2010 with regard to administrative cooperation arrangements for value added taxation needed in the digital age, COM(2022) 703.
The purpose of the proposals is to modernize, clarify and simplify VAT rules in the EU. According to the commission, the VAT system has become prone to fraud and complicated for companies. The VAT rules for cross-border trade are already 30 years old and have not been adapted to doing business in the digital age. The VAT system has not yet fully utilized the opportunities brought by the development of technology. With the help of new digital solutions, the VAT deficit can be tackled more effectively. At the same time, they can be used to simplify VAT obligations and reduce the costs incurred by companies.
The proposals are based on the Commission’s communication of 15 July 2020 on an action plan for fair and simple taxation in support of the recovery strategy (COM(2020) 312) and the Commission’s work program 2022 (COM(2021) 645). The proposals are part of the Commission’s REFIT program on regulatory efficiency and effectiveness.
According to the Commission, the VAT directive is a significant obstacle to digitization, as member states must obtain an exemption in order to introduce digital reporting obligations based on electronic invoices. Despite this, many member states have already introduced various digital reporting obligations. The VAT Directive gives Member States broad discretion to introduce the obligations they deem necessary to ensure the correctness of tax collection and to prevent tax evasion. Consequently, reporting obligations vary considerably between Member States. If a company operates in several Member States, fragmented regulation and different reporting obligations cause significant costs, which hinders the functioning of the internal market. In addition, the current EU:
The growth of the platform economy has caused new challenges for the VAT system. With the platform economy, individuals and small business operators who are not liable for tax on their sales can offer services tax-free through platforms and can take advantage of the scale advantages and network effect offered by the platforms. Such activity competes with the business carried out by taxpayers, which causes a distortion of competition in the internal market. According to the commission, neutrality problems arise especially in the personal transport and accommodation services industries. According to the Commission, the problem is also that the VAT rules applicable to sales via platforms are not clear enough and that the member states have applied the VAT Directive’s rules regarding platforms in different ways.
The e-commerce VAT directive stipulated VAT obligations for online marketplaces and simplifications that help companies comply with VAT obligations regarding the provision of services, distance sales of goods and imports. These include electronic VAT registration and paying VAT through a single point of contact, which means registering in a single Member State instead of having to register in all the Member States where consumption takes place. These measures, which entered into force on July 1, 2021, improved compliance with VAT rules by simplifying the VAT system. However, according to the Commission, there are still several situations where the taxpayer has to register in several different Member States, which results in a considerable administrative burden.
2 Objective of the proposal
The aim of the proposal is to modernize VAT reporting obligations and facilitate electronic invoicing, update the VAT rules for the platform economy and move to common VAT registration in the EU.
According to the Commission’s estimate, the proposals would bring a total of EUR 172-214 billion in net benefits between 2023 and 2032.
3 The main content of the proposal
The proposals include three main sets of measures aimed at:
1) Reforms VAT reporting obligations by introducing digital reporting requirements, which unify the information submitted to the tax authorities in electronic form about each transaction by the taxpayer. At the same time, mandatory electronic invoicing will be introduced in cross-border transactions.
2) Responding to the challenges of the platform economy by reforming the VAT rules applicable to the platform economy to ensure equal treatment by clarifying the country of sale rules applicable to these transactions and by enhancing the role of platforms in charging VAT when they enable the sale of goods and short-term accommodation or passenger transport services; and
3) Avoids the need for multiple VAT registrations in the EU and improves the functionality of the special single point of contact systems used for declaring and paying the VAT payable on distance sales of goods by introducing a common EU VAT registration. This means improving the functioning of special schemes and expanding the use of special schemes and reverse tax liability to minimize situations where a taxpayer has to register in another Member State.
The proposed measures would be introduced in stages in the period 2024–2028.
3.1 Digital VAT obligations
3.1.1 Reform of digital VAT reporting
In order to improve the tax control of cross-border intra-EU transactions and to eliminate the current fragmentation caused by the different reporting systems of the member states, it is proposed to reform the VAT obligations by introducing digital VAT reporting. The Commission’s legislative proposal also includes provisions on electronic invoicing supporting digital VAT reporting.
According to the Commission’s proposal, the reporting of intra-Community transactions would be reformed. The proposed reporting would be transaction-specific and mandatory in cross-border community trade in goods and EU trade in services. The digital reporting obligations would cover the same transactions that are currently reported with a summary declaration, with the exception of goods transferred in accordance with the delivery warehouse arrangement referred to in Article 17a of the VAT Directive. The reporting obligations would therefore apply to trade between companies. The mandatory reporting obligation would apply not only to the seller, but also to the buyer, because it would be important to be able to compare the information provided by the seller with the information provided by the buyer in the fight against VAT fraud. The current summary notification would no longer be required.
The Commission’s proposal gives member states the opportunity to introduce transaction-specific reporting also in domestic situations. However, the member state’s internal reporting obligation should meet the digital reporting requirements for intra-Community transactions.
In order to achieve the necessary uniformity in the reporting of intra-Community transactions, the information to be reported should be the same in all Member States. The proposal further states that an unnecessary administrative burden on companies operating in several Member States should be avoided. Member States would not be given the opportunity to request other information. An electronic invoice from the structures would be used as the basis for VAT reporting. The standard is a standard approved in the Commission’s implementing decision (EU) 2017/1879 on the publication of the list of reference information and syntaxes of the European standard for electronic invoicing in accordance with Directive 2014/55/EU of the European Parliament and of the Council. The European standard has a semantic model of the core parts of the electronic invoice. Invoices according to this standard should be accepted in all Member States. Member states could also allow the submission of information on electronic invoices in other compatible data formats.
3.1.2 Implementation of electronic invoicing
For the invoicing of cross-border transactions within the community, it is proposed to introduce mandatory electronic invoicing. Member states could also introduce electronic invoicing for local sales if they wish. Using paper invoices would only be possible to a limited extent.
Issuing an electronic invoice would not require the approval of the recipient of the invoice. According to the proposal, issuing and delivering an electronic invoice to the customer should also not require prior permission or verification from the tax administration.
In order for the VAT system to be implemented effectively, the information should be sent to the tax administration without delay. A deadline would be set for issuing the invoice, which would be two working days from the completion of the taxable event, i.e. when the invoice is issued or should have been issued. Certain information necessary for supervision would be required from the invoices, and no more than this should be required on a per member state basis either. The seller’s bank account identifier and payment due date would be added to the content requirements of the invoice to track cash flows. Mandatory information would also include a reference to the serial number of the previous invoice in repair invoices.
3.1.3 Centralized electronic VAT database
The goal of introducing digital reporting is to promote tax collection by providing transaction-specific information to tax administrations. The Commission proposes a new centralized electronic VAT information system, hereinafter the VIES system, in order to make the information efficiently available to the tax administrations of the Member States and to facilitate the analysis and cross-checking of data in the EU. Member states would be required to transmit information to the VIES system. Among the information exchanged through the VIES system, the most important would be information collected from cross-border transactions. In addition, information related to the identification of taxpayers would be exchanged.
Even currently, information on VAT is exchanged between member states, for example on cross-border sales between taxable persons. This information is collected in a monthly summary notice. In the future, this summary notification would no longer be collected, but would be replaced by transaction-specific information transmitted to the VIES system through the member states.
The proposal states that the competent authorities of the member states should transmit the information to the VIES system no later than one day after the collection of the information provided by the taxpayer. The Commission would develop, maintain, host and technically manage the centralized system, but each Member State would develop, maintain, host and technically manage the national electronic system to automatically transmit the data to be submitted to the centralized system. The VIES system would be available to officials appointed by the member states to monitor the correct application of VAT legislation and fight VAT fraud. The data would be stored in the VIES system for five years, so that Member States would have a reasonable time to carry out VAT audits.
Restrictions on data protection obligations and rights would apply to the VIES system in accordance with Article 55, paragraph 5 of Regulation (EU) No. 904/2010.
The provisions of the directive and regulation would apply from January 1, 2028.
3.2 Value added taxation of the platform economy
3.2.1 Sale of a short-term accommodation service or passenger transport service through an electronic interface
The Commission proposes that taxpayers who enable the sale of short-term accommodation services or passenger transport services using an electronic interface, such as a marketplace, platform, portal or similar tool, would be involved in the collection of VAT. According to the proposal, the administrator of the electronic interface would be considered to purchase accommodation or passenger transport services from the seller under certain conditions and resell it to the buyer. The procedure would be applied when the seller of a short-term accommodation service or passenger transport service is an entity other than a taxable person, such as an individual or a small business operator. The administrator of the electronic interface would account for VAT on the sale of accommodation or personal transport services through the interface.
The scope of the proposed procedure regarding electronic interfaces would not include situations where the special system for travel agencies is applied.
A taxpayer maintaining an electronic interface and a seller of accommodation or passenger transport services offered through the electronic interface could, if the conditions are met, apply the special system for small businesses to their own sales.
According to the Commission’s proposal, the Council’s Implementing Regulation (EU) No. 282/2011 would provide more specific details regarding the application of the practice, such as when the operator of the electronic interface would be considered to enable the sale of a service through the electronic interface and how the operator of the electronic interface can determine the tax liability status of the service provider.
3.2.2 Deliveries of goods in the EU via an electronic interface
The Commission proposes that the responsibility of the operators of electronic interfaces for carrying value added tax be extended also with regard to trade in goods, in order to ensure equal treatment of sellers inside the EU and outside the EU when they sell goods through an electronic interface in the EU.
Currently, the special tax liability for the operator of the electronic interface is applied in EU trade only when a taxable person not established in the Community sells goods to a buyer other than a taxable buyer. According to the Commission’s proposal, the administrator of the electronic interface, which enables the sale of goods through the electronic interface, would be considered the seller of the goods in all transfers that take place in the territory of the Community, regardless of the tax liability status of the buyer or whether the actual seller of the goods is established in the territory of the Community or not. The administrator of the electronic interface would be considered to buy the goods from the actual seller and sell them to the buyer. An exception to this would be a situation where the administrator of the electronic interface operates only locally in the territory of one member state.
In addition, according to the proposal, the administrator of the electronic interface would be considered to be the agent of the transfer of goods whenever goods are transferred from a warehouse located in the territory of the Community to a warehouse located in another member state and the administrator of the electronic interface enables the transfer of goods. The operator of the electronic interface would also be considered a seller with regard to subsequent transfers that occur after such a transfer.
3.2.3 Country of sale of the service performed by the taxpayer maintaining the electronic interface
According to the Commission’s proposal, the regulations on the country of sale of the services performed by the platforms, which enable sales via an electronic interface, would be clarified. According to the proposal, clarifying the regulations would be necessary because the VAT treatment of the services provided by the platforms has varied between member states. Some member states have considered the services in their tax practice as electronic services and some as intermediary services. The Commission proposes that the place of performance of the service performed by the electronic interface, which enables sales via the electronic interface, should be the place where the main transaction is carried out according to the provisions of the VAT Directive.
3.2.4 VAT treatment of short-term accommodation
The VAT Directive exempts the rental of immovable property from tax. However, according to the directive, this exemption does not apply to accommodation activities carried out in the hotel sector or a similar sector. According to the Commission, some of the Member States have also applied the tax exemption for the rental of immovable property to short-term accommodation activities.
According to the Commission’s proposal, the VAT directive’s provisions regarding tax exemptions would be specified in such a way that the uninterrupted rental of accommodation for a maximum period of 45 days would be considered equivalent to accommodation activities carried out in the hotel industry. Therefore, according to the Commission’s proposal, the tax exemption for the rental of immovable property could not be applied to the sale of such a short-term accommodation service, and the sale would be subject to value added tax.
The provisions of the directive and regulation would apply from January 1, 2025.
3.3 Common EU VAT registration
The Commission is proposing measures aimed at reducing the need to register as a VAT payer in several Member States. Among other things, the Commission proposes that the scope of the VAT single point of contact registration, notification and payment systems (special systems) be expanded, and that the functionality of the special systems be improved. Special systems refer to three special systems based on the VAT Directive: Union system, non-Union system and import system. In addition, it would be possible to use reversed tax liability in trade between taxpayers.
The Commission also proposes measures to promote the authorities’ ability to fight fraud and implement tax control.
3.3.2 Checks that improve the functionality of special systems
The Commission proposes that some provisions of the e-commerce VAT directive be revised in order to clarify the regulation.
The calculation principles of the 10,000 euro threshold for small companies would be revised.
The provisions of the value added tax directive regarding services provided by taxpayers not established in the Community other than the Union system would be specified in such a way that the system in question is applied to all services sold to consumers in the Community. The system would thus also be applied when the consumer is not established in the Community.
The provisions of the VAT Directive regarding the refund procedures applicable to taxpayers using the Union system and the import system would be specified.
In addition, the provision of the VAT Directive regarding the time of creation of the taxable receivable would be clarified with regard to transfers reported in the Union system and other than the Union system.
3.3.3 Extending the scope of the Union system for certain sales
According to the Commission’s proposal, sales to non-taxpayers could also be reported in the Union system in the following situations:
– the seller installs or assembles the goods;
– sales in means of transport within the Community;
– sale of electricity, gas delivered through a natural gas network located in the Community or a network connected to it, or heating and cooling energy delivered through a heating and cooling network; mixed
– selling goods locally.
In addition, the Commission proposes that the scope of the Union’s system be expanded so that it would be possible to report tax-free sales as well as sales subject to a zero tax rate in the special system.
3.3.4 Supplies of goods covered by the marginal taxation procedure
The Commission proposes that the definition of intra-Community distance selling be amended so that its scope also includes sales of second-hand goods covered by the profit margin system, as well as art, collectibles and antiques. It would then be possible to use a special system to report these sales.
In addition, the rules of the country of sale of the goods in question would be changed so that taxation would take place in the country of destination. According to the proposal, the place of delivery of intra-Community distance sales of used goods and art, collectibles and antiques covered by the profit margin system would be the place where the goods are at the time of delivery or transport to the buyer. According to the new country of sale rule to be added to the directive, the country of sale of goods covered by the margin system would be the buyer’s country of establishment when the delivery of the goods does not involve transport or the transport takes place within the territory of one member state.
3.3.5 Application of reverse tax liability
The Commission proposes that Member States should allow the application of reverse tax liability whenever a taxable person, who is not registered as a taxable person in the country where the goods are sold, sells the goods to a VAT-registered buyer in that Member State. According to the commission, this could avoid the fact that the seller would have to register as VAT liable in the country of sale.
However, the mandatory reversed tax liability would not be applied to transfers of used goods and art, collectibles and antiques covered by the profit margin system.
In order to enable monitoring, sales between taxable persons falling within the scope of reverse tax liability would be reported with a summary notice. At a later stage, the digital reporting obligations proposed by the Commission would be applied to sales.
3.3.6 Transfers of business assets
The transfer of business assets from one member state to another is a situation that still causes taxpayers the obligation to register in several different member states. The Commission proposes that transfers of business assets from one Member State to another be exempted from tax and that the transfers be reported in a special system. However, in order to avoid problems related to the right to deduct, this procedure would not apply to the transfer of goods for which the taxpayer does not have a full right to deduct from community procurement or transfers of goods belonging to the taxpayer’s fixed assets.
Since the simplification proposed by the Commission regarding transfers of business assets would also cover the transfers of goods currently covered by delivery warehouse arrangements, the application of delivery warehouse arrangements would no longer be necessary. The Commission proposes that no new transfers in accordance with delivery warehouse arrangements could be made after 31 December 2024. Delivery warehouse arrangements would be completely abandoned by December 31, 2025.
3.3.7 Changes concerning the import system
The Commission is proposing measures to promote compliance with VAT rules and authorities’ control possibilities for distance sales of imported goods.
The use of the import system is currently voluntary. The Commission proposes that the use of the import system should be mandatory for the operator of the electronic interface that enables the import of certain goods for consumers into the Community. However, this would not apply to those taxpayers who enable sales through the electronic interface exclusively in the territory of their own Member State of establishment.
The Commission proposes that the exchange of information before importation between the seller or the operator of the electronic interface and the customs authorities be developed in order to better secure the operation of the import system. According to the proposal, the Commission’s implementing regulation could provide for measures to combat tax fraud, for example by linking the individual value added tax identifier (IOSS identifier) given to the taxpayer using the import system with the shipment-specific number associated with the imported goods.
According to the Commission’s proposal, Regulation (EU) No. 904/2010 on administrative cooperation would be amended in such a way that the competent authorities of the Member State would be given wider access than before to the information provided by the registration notification of the import system. In addition, the authorities could obtain from the Surveillance system information on imported goods by Member State of consumption for each IOSS identifier.
3.3.8 Correction of tax declarations to be given in special systems
The Commission proposes that the procedure for correcting tax returns for special systems be changed in such a way that it would be possible to correct the information in the tax return until the deadline set for issuing the tax return for the relevant tax period.
The provisions of the directive and regulations described in section 3.3.2 would apply from 1 January 2024. In other respects, the provisions of the directive and regulations would apply from January 1, 2025. However, the provisions regarding the waiver of delivery warehouse arrangements would apply from January 1, 2026.
4 The legal basis of the proposal and the relationship with the principles of proportionality and subsidiarity
The proposals regarding the Value Added Tax Directive 2006/112/EC and the Administrative Cooperation Regulation (EU) No. 904/2010 are based on Article 113 of the Treaty on the Functioning of the European Union. According to the article, the Council unanimously issues regulations on the harmonization of member states’ legislation on indirect taxes to the extent that harmonization is necessary to ensure the implementation and operation of the internal market and to avoid distortions of competition. The proposal for Implementing Regulation (EU) No. 282/2011 is based on Article 397 of the VAT Directive, according to which the Council decides unanimously on the proposal of the Commission on the measures required to implement the directive. The Government’s position corresponds to the Commission’s view of the legal basis.
According to the Commission, the proposals are in accordance with the principle of subsidiarity. Considering that VAT is harmonized at the EU level, and that the goals of the proposal require the amendment of the VAT directive, the goals cannot be achieved solely by the actions of the member states. The challenges behind the proposals are common to all Member States and fragmented national actions could distort trade in the internal market. In addition, the size and persistence of the VAT deficit show that national measures are not sufficient to combat cross-border VAT fraud. The initiative to modernize VAT in the digital age therefore requires the Commission’s proposals to amend the VAT Directive and related regulations.
According to the Commission, the proposals are in proportion to the intended goal. Proportionality is ensured by the fact that member states can decide whether they will introduce digital VAT reporting obligations for domestic sales, especially taking into account the amount of VAT fraud in the domestic market. In order to implement uniform EU-wide digital VAT reporting, it is necessary that national systems are compatible with the reporting obligations applicable in Community trade. In terms of the platform economy, the measures are aimed especially at the accommodation and passenger transport industries, where the neutrality problems are the most serious. The proposals for common EU VAT registration do not interfere with the national VAT registration procedures of the member states. Instead, the measures focus on limiting situations where a taxpayer established outside the Member State of consumption has to register in the Member State of consumption. The EU’s common VAT registration system complies with the principle of proportionality because it makes the operation of the internal market more sustainable.
The Government’s position corresponds to the Commission’s view on the principle of proportionality and subsidiarity.
5 Effects of the proposal
When implemented, the Commission’s proposal for a directive will require the national VAT legislation to be amended to reflect the proposed changes. The proposed amendments to the implementing regulation and the regulation on administrative cooperation would be binding and applicable as such in the member states.
According to the Commission’s estimate, the proposed changes would increase the administrative costs of tax administrations and companies at the EU level by approximately EUR 14 billion in the years 2023–2032. At the same time, value added tax revenues would increase by around 135–177 billion euros, and savings for companies and tax administrations would be around 51 billion euros as a result of the proposed changes. According to the Commission’s estimate, the net benefits of the proposed changes would then be 172–214 billion euros at the EU level in the years 2023–2032. Relative to the size of the Finnish economy, this would mean an estimated 3–4 billion euros in the years 2023–2032. However, the effects for Finland may be smaller, taking into account, for example, the smallness of the VAT deficit in Finland compared to many other member states. The Commission has not assessed the effects of the proposals by Member State.
The internal market’s digital reporting obligation causes one-time and ongoing information system and other administrative costs for companies and tax administrations. On the other hand, the digital reporting obligation can also partially reduce companies’ administrative costs when switching to electronic invoicing and if a national pre-filled VAT return is introduced. The elimination of summary notifications will also lighten the administrative burden on companies. According to the Commission’s assessment, the net beneficiaries would be especially large companies trading across borders. Only small and medium-sized companies operating in Finland are estimated to have minimal costs from the proposed changes.
According to the Commission’s EU-wide estimate, the proposed changes to the digital reporting obligation would increase administrative costs for companies by 11.3 billion euros and tax administrations by 2.2 billion euros. However, in addition to the costs, the proposed changes would bring about 41.4 billion euros in cost savings and about 111 billion euros more in VAT revenue for the member states. According to the Commission’s estimate, the digital reporting obligation would then bring about 138.9 billion net benefits in the EU in the years 2023–2032.
5.2 Value added taxation of the platform economy
According to the Commission’s estimate, the proposals related to the platform economy would increase the Community’s VAT revenues by 24–66 billion euros and bring about 0.5 billion cost savings at the EU level in the years 2023–2032. Finland’s tax revenues would increase, first of all, due to the expanded tax base. Second, transferring VAT liability from small operators to larger platforms would facilitate the control of tax obligations and increase compliance with obligations. The changes are estimated to reduce borderline and interpretation problems related to the platform economy, as well as to reduce competitive distortions between similar services offered through different channels.
5.3 Common EU VAT registration
The proposed changes to VAT registration would reduce the need for companies to register in several Member States and make compliance with VAT obligations easier, especially for small and medium-sized companies. The changes would also reduce competitive distortions and facilitate supervision by the authorities. According to the Commission’s impact assessment, the proposed changes to VAT registration would affect approximately 300,000 companies in the EU, of which approximately 280,000 are small and medium-sized companies. According to the Commission’s estimate, the proposed changes to VAT registration would bring about EUR 9 billion in cost savings to companies in the EU in the years 2023–2032. The proposed changes to VAT registration would not have a significant impact on the member states’ VAT revenues.
6 Jurisdiction of Åland
The matter does not fall under the legislative authority of the province of Åland.
7 National processing of the proposal and processing in the European Union
The opinions of the European Parliament and the European Economic and Social Committee have not yet been issued.
The proposals have been presented in the council’s tax working group on December 12, 2022. The proposals will continue to be considered in the council’s tax working group in the spring of 2023.
Opinions on the proposals were requested from authorities central to the proposal, central business organizations and actors, and the Åland provincial government. The opinion period was 9 December to 21 December 2022. In the opinions received within the short comment period, the objectives of the proposals were viewed positively.
A draft memorandum on the proposals has been in the written procedure from January 9 to January 11, 2023 in the EU9 (Taxes) section of the EU Affairs Committee.
8 State Council’s position
The State Council supports the goal of the proposals to modernize the VAT system in such a way that the VAT rules are even better suited to business in the digital age. The goal of utilizing the opportunities offered by digital technologies in the fight against tax fraud is worthwhile. The State Council also considers the goal of simplifying the value added tax system and reducing the administrative costs of companies to be important.
The Government supports the goal of the proposals to improve access to VAT information for use by the tax authorities and thereby ensure the correct application of VAT legislation and combat VAT fraud. However, it is necessary to review the time limits proposed by the Commission, taking into account the needs of supervision and the resulting administrative burden. The Government supports the goal of reforming, harmonizing and digitizing VAT reporting obligations and the introduction of electronic invoicing that supports reporting. It is still necessary to look at the reform from the perspective of SMEs. The Government supports updating the VAT rules for platforms in order to ensure uniform application of the rules and neutrality of competition in the internal market. In addition, it supports the goal of reducing the administrative burden by reducing the need for taxpayers to register for VAT in several Member States. However, the details of the proposals and the resulting costs for taxpayers and the Tax Administration still need to be clarified in more detail. The State Council also considers that the transition periods should be long enough to guarantee a smooth implementation.