Opinion of the European Economic and Social Committee on the proposal for a Council Directive amending Directive 2006/112/EC as regards VAT rules for the digital age (COM(2022) 701 final – 2022/0407 (CNS)) and the proposal for a Council Regulation amending Regulation (EU) No 904/2010 as regards the VAT administrative cooperation arrangements needed for the digital age (COM(2022) 703 final – 2022/0409 (CNS))
Summary and recommendations
- The European Economic and Social Committee (EESC) welcomes the Commission initiative aimed at updating the 30-year-old Value-Added Tax (VAT) rules in order to make the single market function better with less fragmentation, and to make it fit for the digital era.
- The EESC considers that a VAT system better adapted to the current developments of the digital economy, improving the functioning of the single market, should be the main objective of the proposal. In addition, the proposal should make tax collection effective and timely, reducing VAT fraud and, as a consequence, the VAT gap.
- In order to fully benefit from the single market, businesses require uniform application of VAT rules across the EU. This can only be ensured by action at EU level, preventing red tape, discrepancies and loopholes in the applicable VAT rules. The EESC encourages the Commission to continue working towards implementation and stresses the importance of explanatory notes or similar guidance to ensure uniformity.
- The EESC is pleased that the proposed rules for digital platforms and their role in helping the collection of VAT are consistent with previous Commission initiatives on the digital economy.
- The EESC appreciates that the domestic reverse charge mechanism will be applicable to supplies of both goods and services. The EESC points out that the current system treats goods and services in intra-Community trade differently. The EESC regrets that the comprehensive proposal from the Commission does not take the opportunity to align VAT treatment between goods and services. This would have decreased the administrative burden on businesses, especially on SMEs.
- The EESC considers that the suggested timeline for reporting intra-Community supplies of goods and services within two days seems unreasonably short. The EESC is worried that the time limit of two days for electronic invoices and reporting would constitute a barrier to intra-community trade, especially since many SMEs are already facing problems with the much longer time limit within the current regulatory framework.
- The Commission suggests that the possibility of issuing summary invoices be eliminated under the proposal. The EESC considers that summary invoices should not be eliminated since it would create problems in many sectors. The use of summary invoices should always be allowed for domestic transactions. For intra-Community transactions, the EESC notes that another possibility could be to limit the use of summary invoices, e.g. by having a limitation of seven days.
- The EESC encourages the Commission to continue working towards including VAT deductions in the One Stop Shop (OSS) as soon as possible and towards timely VAT refunds.
- The EESC is concerned that the considerable implementation costs for the measures in the comprehensive VAT package could lead to higher prices for consumers.
- The EESC shares the Commission’s view that the intra-EU dimension of VAT fraud requires EU intervention, in line with a proper application of the subsidiarity principle.
- The EESC points out that the data collected and exchanged between tax authorities could include personal data as well as sensitive business data. Such data must be protected and handled with the utmost care to preserve the integrity of consumers and businesses.
Source eur-lex.europa.eu
