Feedback from: European Fund and Asset Management Association (EFAMA)
- EFAMAs members’ concerns are limited to the Digital Reporting Requirements (DRRs) (e.g. electronic invoices) that will be introduced.
- One of the aims of this DRR element of the proposal is to fight tax fraud (which can be hard to happen in transactions that are VAT exempt). We understand that the exemption to issue invoices for exempt supplies will remain available and these rules will not be impacted by the ViDA proposal.
- The modernisation and simplification of the VAT reporting obligations are to be welcomed by the concerned businesses, such as the investment management sector, but also by tax authorities that, otherwise would have to start handling a huge volume of data that most likely and ultimately would be useless because exempt services are not a source a VAT fraud.
- We welcome the consistency of the proposal and the fact that VAT-exempt services will not be covered by the new DDR. Hopefully, the requirements that already apply will not be changed by the ViDA proposal. With this solution, the proposal should allow tax authorities to focus on the real risk of tax fraud cases and should not create new burdensome procedures/compliance obligations that would represent new costs that in the end would be imposed on clients/consumers (e.g. end investors) for no reason.
- At first glance, this important proposal might not have a major impact on our industry that would continue to benefit from the exemption to issue invoices for exempt services of article 220.2 of the VAT Directive, which we understand is not affected by the ViDA proposal and that must be kept otherwise, its suppression would imply an additional administrative burden that would be useless due to the absence of VAT fraud in case of exempt services.
- Notwithstanding, as some actors in the investment management sector may perform VAT-taxable services (few) and they may have to deal with the new DDR rules we take the opportunity to raise our voice and share the following specific comments on the proposal:
- Article 222 The two-day delay to issue and report invoices is extremely short, will lead to many practical difficulties and impose huge investments and will be detrimental to the qualify of the reported information. In this respect, we note that other reporting aimed at fighting against VAT fraud (e.g. DAC7 or Central Electronic System of Payment information (CESOP)) foresee a much longer delay.
- Article 223 (to be deleted) Summary invoices must be maintained because they are an extremely useful tool in case of long-term relationships which is typically the case in the investment management industry. The fact that summary invoices are used in the case of long-term relationships indicates that the risk of fraud in these cases is limited.
- Article 232 (to be deleted) It is proposed that the authorisation of the customer to accept electronic invoices should be removed as from 1st January [2024 deadline that Member States will have to adopt, publish and apply the ViDA proposal provisions]. This would require that all Member States unanimously agree with this proposal and the issuance of national guidance will be required. Suppliers and customers will need to update their systems and controls to send and receive invoices electronically. Consequently, with these challenges in mind, Member States should consider the introduction of an additional delay of one year and remove the authorisation of the recipient rule only as of 1st January [2025].
- The transposition deadlines of the ViDA proposal will be challenging both for Member States and for businesses that should be allowed sufficient time to implement the new rules. We understand that these concerns will be examined in more detail by other affected and/or specialized stakeholders (namely business and tax authorities representatives that will be requested to implement the new rules from an IT perspective).
Source EFAMA
Input by other organizations into the public consultation
- EESPA
- InHouse Tax Forum (Belgium)
- Italian Banking Association (ABI)
- ETNO/GSMA
- DATEV eG
- Siemens AG
- Sovos
- EuroCommerce
- Inter IKEA Group
- FedEx Express
- IDW Institut der Wirtschaftsprüfer in Deutschland e.V.
- EU Travel tech
- Business Europe
- MDDP
- PwC
- TEI
See also – The Library of VAT in the Digital Age (VIDA)
Join the LinkedIn Group on ”VAT in the Digital Age” (VIDA), click HERE
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