European Commission (EC) proposes near real-time ‘post-audit’ model for 2028 Digital Reporting Requirements; rules out ‘pre-clearance’ reporting and approval by tax authorities of VAT invoices
In its proposed Digital Reporting Requirements pillar of its VAT in the Digital Age reforms, the EC has opted not to require taxpayers to live report to tax authorities VAT sales invoices in advance of issuance to customers – ‘pre-clearance model’. Instead, it will oblige reporting of headline invoice information only for intra-community supplies from 2028. The transactional-level information on acquisitions and dispatches will be first sent to national tax authorities as a ‘post-audit model‘, who will then immediately transmit to a new VIES central database maintained by the EC.
This data will be used by national tax authorities and the EC to monitor intra-community trade and detect VAT fraud. This is part of a shift to a Continuous Transaction Control framework being adopted.
Pre-clearance e-invoice regimes have become the preferred model around the world – not just recently in Europe with Italy and others. Pioneering examples include Mexico and Peru. Positioning the tax authorities between suppliers and their customers is seen as the optimum way to secure tax revenues. However, it does create burdensome investment costs which many EU states feel disproportionate where they have low levels of VAT fraud.
Existing pre-clearance e-invoice model barred from 2028
Member states will be free to mandate national structured e-invoicing or post-invoice transactional reporting on domestic returns. However, after 2028, any newly launched regimes may not include any initial requirement for reporting the transaction for pre-approval or validation by the tax authority.
This means that existing pre-clearance regimes such as Italian SdI or the proposed 2024 Polish and French regimes, may continue. However, all national regimes must converge by 2028 with the EU’s e-invoicing standard EN 16931.
As e-invoicing mandates expand, businesses will likely need to comply with more than one country, model or mandate to cover cross-border transactions. Therefore, it’s beneficial to understand the most common models and how they work in practice.
Live transaction determination to structured e-invoices
Our tax engine, VAT Calculator, is able to determine VAT in real-time for transactions, and produce e-invoices to most standards, including PEPPOL or local variations. If you would like to learn more about effortless international determination and electronic invoicing, please contact us.
EU VAT in the Digital Age reforms
| EU VAT in the Digital Age | |
| 3 reforms to improve efficiency of VAT for all and reduce fraud | |
| 1. Single VAT registration in the EU; extension of OSS to B2C own stock movements | 2025 (?): 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 | |
| Marketplaces deemed supplier for EU sellers | |
| EU IOSS mandated for marketplaces | |
| EU tackles misuse of IOSS numbers | |
| Quick fixes to existing e-commerce VAT rules | |
| Call-off stock VAT simplification ends | |
| Harmonisation of B2B Reverse Charge rules | |
| 2. Digital Reporting Requirements; e-invoicing | 2030 (?): 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) | |
| E-invoices mandated intra-community supplies 2028 | |
| EC Sales lists replaced by Digital Reporting Requirements | |
| 2014 EU legal permissions for e-invoicing lifted | |
| 3. VAT treatment of the platform economy | 2026 (?): 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 |
| Read more - Travel & accommodation platforms deemed suppliers for EU VAT | |
