VAT in the Digital Age: Key Takeaways

December 8, 2022

Need more detail? ūüĎČRead our full summary.

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).

‚ÄćWho 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 ‚ÄúBuyer Acceptance‚ÄĚ for e-invoicing (MS don‚Äôt 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 ‚ā¨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

‚ÄćWhat‚Äôs 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

‚ÄćHow 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.

‚ÄćGet in touch with us!

Authors

Nikolett Bajtai is a Tax Manager for Fonoa’s Research & Intelligence team, working to track global legislation and ensuring the company’s products stay compliant. Attila Felfoldi is a Tax Research Analyst at Fonoa who previously worked at EY, and as a Senior Tax Consultant at PwC. Selin Ring is a Tax Manager for Fonoa’s Research & Intelligence team.