Parliament update on Finance Ministers agreed VAT in the Digital Age text
Following the 5 November ViDA political agreement by EU Finance Ministers, the EU Parliaments’ Committee on Economic and Monetary Affairs has provided a draft report. This focuses on changes to the ViDA reforms since the Parliament initially approved the text on 22 November 2023.
A key issue of debate within the Council was the deemed supplier regime, which posed challenges to achieving a final agreement.
3-pillars of ViDA reforms
The package developed an action plan for fair and simple taxation that emphasised the need to reflect on how technology can be used in the fight against tax fraud and how the current VAT rules in the European Union could be adapted for doing business in the digital age. The three changes to make VAT fit for the digital age are
-
-
- July 2030: a new real time digital reporting system based on e-invoicing,
- Jan 2030: update VAT rules for the platform economy ; and
- July 2028 single vat registration for businesses selling to consumers across the EU.
-
The directive and the regulation were subject to a special legislative procedure. The European Parliament was consulted and delivered its opinion on 22 November 2023.
Parliament calls for review of deemed supplier
On 5 November 2024, the Council agreed on the ViDA package. However, given the substantial differences between the Commission’s proposal (i.e. the Directive) on which the European Parliament was initially consulted and the text of the Council, the Council decided on 7 November 2024 to re-consult the European Parliament.
The deemed supplier regime was a significant point of contention within the Council, making it particularly challenging to reach a final compromise.
The Council decided that the deemed supplier rules will be introduced first on a voluntary basis as from July 1, 2028, and then mandatory as from January 1, 2030. Member States will also be authorised to exempt SMEs from the deemed supplier regime without having to report to the VAT committee. In its first opinion, the EP highlighted the need to limit the administrative burden for SMEs.
The Council also introduced more flexibility for Member States to operate their own invoicing systems as many member states have already invested heavily in their own software. Summary invoices are also reintroduced under certain conditions despite the Commission’s proposal to prohibit them. The Parliament also favoured the reintroduction of summary invoices in order to keep flexibility and simplicity for Member States and businesses.
On the implementation deadlines, the Parliament opinion suggested longer deadlines than in the Commission proposal. The Council even further extents the deadlines beyond the Parliament’s proposals.
Therefore, the rapporteur is of the view that a simplified procedure without amendments is the relevant procedure.
EU VAT in the Digital Age reforms
| EU VAT in the Digital Age | |
| 3 pillars to improve efficiency of VAT for all and reduce fraud | |
| 1. Digital Reporting Requirements; e-invoicing | Jul 2030-35: Mandatory digital reporting of intra-community transactions; obligation to be able to issue and receive intra-community e-invoices; member states free to impose own e-invoicing or real-time reporting but most conform to EU e-invoice standard EN 16931 |
| Read more about EU Digital Reporting Requirements (DRR) | |
| Structured e-invoices mandated for intra-community supplies | |
| EC Sales lists replaced by Digital Reporting Requirements | |
| Withdrawal of EU permission requirements for e-invoicing | |
| 2 Platform economy | Jan 2030: Travel & accommodation sharing platforms to become deemed supplier / liable to users' VAT. New definitions of the roles of providers, users and platforms to avoid double and no-taxation (voluntary Jul 2028) |
| Read more - Travel & accommodation platforms deemed suppliers for EU VAT | |
| 3 Single VAT Registration; extension of OSS | July 2028: Following the 1 July 2021 introduction of the One Stop-Shop (OSS), extended to cover movement of own stocks prior to cross-border B2C to reduce the foreign, non-resident VAT registrations & returns. Plus to movements of own stock with ending of 'call-off' stock burden |
| More details on Single VAT Registration in the EU | |
| Call-off stock VAT simplification ends | |
| Harmonisation of B2B Reverse Charge rules | |
