The Council of the European Union has indicated that all Member States except one approved the compromise version of the draft ViDA Directive following their examination of the text on 14 May 2024.
According to our information, Estonia objected to the proposal to make platforms liable for VAT when they connect a service provider and his customer for the supply of accommodation or road transport services.
The Belgian Presidency has nonetheless expressed hope of reaching an agreement before its term is out (i.e. by 30 June). In anticipation of such an outcome, we have outlined below the main provisions of the draft text as it currently stands.
1. Introduction of (practically) real-time digital reporting
Electronic invoicing would be compulsory for intra-Community B2B transactions as from 1 July 2030. The same date would also mark entry into effect of the new digital reporting requirements (DRR), i.e. the obligation for enterprises to report invoicing data to the tax authorities so that it can be shared between Member States. In principle, these reporting obligations would apply to both the seller/service provider (issuer of the invoice) and the client (recipient). However, Member States could choose to exempt domestically registered enterprises from this requirement when they are the receiving party. This latest draft version also allows for enterprises to commission third parties to perform their obligations, as well as for the creation of public invoicing portals (as in France).
The DRR would replace the recapitulative statements that taxable persons are currently required to file for their cross-border B2B transactions.
The compromise text includes a number of relaxations compared with the initial draft, which essentially respond to the concerns expressed by business representatives and relayed by many member states, including France.
As a result, the deadline for issuing invoices subject to the DRR will be set at 10 days from the chargeable event (instead of the two days initially envisaged). Data should be transmitted as soon as the invoice is issued by the seller/supplier (but within 5 days of issue in the case of self-billing). The reporting deadline by the recipient (if applicable in their member state) would be 5 days from receipt of the invoice issued by the supplier.
Summary invoices which were to be banned under the initial draft, would remain permissible, provided they are issued within ten days of the end of the calendar month concerned.
Under the draft directive, Member States could allow enterprises to work with third-party partners to meet their e-invoicing and reporting obligations and could set up public portals to centralise data flows (as France has chosen to do as part of its ongoing e-invoicing reform).
Member States could opt to accept other invoice formats for transactions not subject to the DRR, should they so wish (i.e. paper invoices or electronic invoices that do not satisfy EU standards).
For domestic transactions, Member States would be free to introduce their own reporting obligations. Some have already done so. Member States that had introduced such obligations by 1 January 2024 would have until 1 January 2035 to bring them into line with the new EU requirements.
When e-invoicing becomes mandatory (i.e. as from the entry into force of the directive for those Member States which already impose it on the basis of a derogation granted for this purpose by the EU Council, or those which will impose it before 2030 for domestic transactions), the client’s prior agreement would no longer be necessary.
2. Other measures included under the new draft
The revised draft also includes a number of adjustments intended primarily to simplify the enterprises’ obligations and fight against tax fraud.
However, the measures proposed – most of which are to enter into effect as from 1 July 2027 – fall somewhat short of the original goals.
The following (non-exhaustive) list sets out the salient upcoming changes:
- Extension of the “deemed supplier” rule for sales facilitated by online platforms
Regarding cross-border supplies of goods facilitated by an e-commerce platform, the deemed reseller mechanism would remain applicable only to transactions performed by sellers established outside the EU. However, as from 1 January 2026, it would apply to all such sales, whether the buyer is a final consumer (B2C) or a taxable person (B2B). Any further extension could only be considered following a report to be published by the European Commission before July 1, 2027.
Online platforms would also be treated as deemed suppliers for short-term accommodation rentals and passenger transport services. The draft text includes two significant adjustments in this respect.
First, for passenger transport services, the rule would apply solely to transport by road.
And second, for accommodation rentals, it would apply solely to stays of not more than 30 consecutive nights, with Member States being free to stipulate whether or not these services should be accompanied by ancillary services.
In addition, the platform would only become liable for VAT if the service provider did not carry out this activity as a taxable person liable for VAT for this activity. And even if the service provider is a private individual, the service could also escape this mechanism - provided the Member State concerned so decides - if the private individual acts for this activity under the small business regime.
- Modernisation of the call-off stock regime
The current call-off stock arrangements would be gradually phased out and replaced by a one-stop shop (OSS) for declarations.
- Generalization of the VAT reverse charge rule for B2B transactions where the seller/service provider is not established or identified in the Member State of taxation of the transaction
Currently optional for member states, this rule would become mandatory.
- Broader use of the EU OSS
The option for enterprises to use the EU OSS to declare and pay VAT on their cross-border transactions would be extended to further types of transaction (sales without delivery or transport, regardless of the client’s VAT status, sales including assembly/installation, etc.).
- Sales of imported goods with an intrinsic value not exceeding €150
The initial plan to make use of the non-EU one-stop shop (IOSS) compulsory would be postponed to an unspecified date. On the other hand, the rules for designating the person liable to pay VAT on imports would be consolidated in order to close certain loopholes created when the e-commerce VAT reform entered into effect on 1 July 2021.
Our tax teams naturally remain at your disposal should you require any further information.
Flash info droit fiscal |EU Member States fail to reach political agreement on draft VAT in the Digital Age (ViDA) Directive | May 15, 2024
