VAT in the Digital Age: Key Takeaways

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The ViDA proposal was published today (8 Dec 2022), in three pieces of EU legislation: VAT Directive (2006/112/EC), Council Implementing Regulation (EU 282/2011) and the Council Regulation on Administrative Cooperation (EU 904/2010).

‍Who should be prepared?

Digital Platforms and Marketplaces (especially passenger transportation and accommodation) whether or not they have a registered presence in the EU
All businesses performing intra-Community transactions

1st Pillar: VAT reporting obligations and e-invoicing

New VIES system for transmission of information between Member States (MS)
EU-wide reporting mandate for intra-community B2B supplies and MS which already have an existing Digital Reporting Requirements (DRR) in place for such transactions will have to adapt them by 2028
Elimination of recapitulative statements (aka European Sales Listings)
New definition for e-invoice (it must be structured, no PDFs) and issuance of e-invoices as a default (other than paper)
Removal of “Buyer Acceptance” for e-invoicing (MS don’t need a derogation to introduce e-invoicing)
New two day deadline for the issuance and transmission of e-invoices
Elimination of the possibility to issue summary invoices

2nd Pillar: VAT treatment of the platform economy

The ViDA proposal makes Digital Platforms and Marketplaces accountable for the VAT due, in cases where the supplier would not be required to do so, as they are a small business or individual provider

3rd Pillar: Single VAT registration in the EU

Extended scope of the One Stop Shop (OSS) and the Import One Stop Shop (IOSS)
OSS rules are extended for the reporting of transfer of own goods by e-commerce sellers prior to the B2C e-commerce sale (B2B2C transactions)
IOSS will be mandated for Marketplaces and sellers in order to combat fraud and errors
The €150 consignment threshold for imported B2C sales is not raised or abolished
Single VAT Registration (SVR) will enable businesses to manage their entire EU VAT obligation through their domestic Tax Administration's online portal

‍What’s next?

The implementation of the changes on the MS level is only expected between 2023-2028
Businesses have to be prepared to comply with the new DRR, e-invoicing and platform economy rules, which will likely require significant IT investments

‍How can Fonoa help?

Fonoa is a global tax automation and compliance solution that helps companies streamline the entire transactional chain so they can scale in a digital, borderless economy. Automate tax determination, minimize risk, and easily handle local tax compliance from one platform, which includes these key products: Lookup, Tax, Invoicing, Reporting, and Data Sharing.

‍Get in touch with us!