On 8 December the European Commission (“EC”) launched its long-awaited proposals to modernize the VAT rules within the EU collectively known as “VAT in the Digital Age package” (“ViDA”). Note that is still a PROPOSAL subject to change.
ViDA has 3 pillars:
- Digital Reporting Requirements (DRR)
- Platform Economy
- Single EU VAT Registration
Today, there is no explicit option available for Member States to introduce mandatory e-invoicing requirements as a means of ensuring the correct collection of VAT and preventing VAT fraud. The VAT Directive makes the use of e-invoices subject to their acceptance by the recipient, in Article 232; this provision cannot be derogated via Article 273, which allows Member States to introduce other obligations on taxpayers to ensure the correct collection of VAT and to prevent VAT fraud. Hence, if a Member State wishes to introduce mandatory e-invoicing requirements, it must do so by requesting a derogation from the Directive under Article 395, which is subject to the unanimous agreement of the Council based on a proposal from the Commission.
The new version of Article 273 applicable as of Jan 1, 2028, continues to give Member States freedom to implement these obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion. However, this freedom is limited in relation to reporting obligations, which can only be implemented according to the provisions of Chapter 6 of Title XI, in relation to the transactions under their scope.
Old version of Article 273
Member States may impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion, subject to the requirement of equal treatment as between domestic transactions and transactions carried out between Member States by taxable persons and provided that such obligations do not, in trade between Member States, give rise to formalities connected with the crossing of frontiers.
The option under the first paragraph may not be relied upon in order to impose additional invoicing obligations over and above those laid down in Chapter 3.
New Article 273 as of Jan 1, 2028
Member States may impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion, subject to the requirement of equal treatment as between domestic transactions and transactions carried out between Member States by taxable persons and provided that such obligations do not, in trade between Member States, give rise to formalities connected with the crossing of borders.
The option under the first paragraph may not be relied upon in order to impose additional invoicing obligations over and above those laid down in Chapter 3, nor to implement additional reporting obligations -over and above those laid down in Title XI, Chapter 6.
In this serie ….
- Part 1: End of the Quick Fix on Call-off simplification, start of Special Scheme for transfer of own goods per Jan 1, 2024
- Includes:
- Extension of the Union One Stop Shop to include Transfer of Own Goods – Title XII, Chapter 6, the following Section 5 is added, new articles 369xa-369xk (Jan 1, 2025)
- Includes:
- Part 2: Recipient should be able to accept E-invoices, Member States may make it mandatory to issue E-Invoices as of Jan 1, 2024
- Includes:
- Electronic invoicing will be the default system for the issuance of invoices as of Jan 1, 2024 (Art. 218)
- The issuance of electronic invoices by taxable persons and their transmission shall not be subject to a prior mandatory authorisation or verification by the tax authorities as of Jan 1, 2024 (Art. 218)
- Several Member States have been granted a special measure to apply mandatory e-invoicing, where such clearance systems have been implemented. These systems can only be applied by those Member States up to 1 January 2028, ensuring the convergence with the EU digital reporting system.
- Issuance of electronic invoices should not be subject to the acceptance of the recipient as of Jan 1, 2024 (Art,. 232)
- Includes:
- Part 3: Member States ”Shall Allow” ”Domestic Reverse Charge” as of Jan 1, 2025 (Art. 194)
- Includes:
- Supplies for which art. 194 is applied should be included in the recapitulative statement of Jan 1, 2025 (Article 262(1)(c))
- Includes:
- Part 4: Invoices SHALL be issued in a structured electronic format if subject to Digital Reporting Requirements as of Jan 1, 2028
- Part 5: An invoice shall be issued no later than 2 working days following the chargeable event as Jan 1, 2028
- Part 6: Elimination of the possibility to issue summary invoices (art. 223) as of Jan 1, 2028
- Part 7: Content of the invoices (art. 226), 3 new data points as of Jan 1, 2028
- Part 8: Digital Reporting Requirements to be filed electronically two days after date of the issuance of the invoice as of Jan 1, 2028
Join the LinkedIn Group on ”VAT in the Digital Age” (VIDA), click HERE
