Fiscal representation to encourage adoption of IOSS and close VAT fraud
Proposals are progressing to reform the Import One-Stop Shop reporting to shut down VAT fraud by non-EU sellers importing low-value items to EU consumers. This includes their intermediaries or marketplaces acting as their deemed suppliers. The plans are being reviewed by the EC’s Working Party on Tax Questions on 9th September.
Plans to include these reforms in EU VAT in the Digital Age reforms were changed to shift them to the 2028 Customs reforms.
Separately, there are talks on IOSS data exchange between EU states to improve VAT detection.
Obliging appointment of IOSS fiscal representative
The focus is on obliging them to adopt IOSS through onerous administrative burdens. This could include obliging them to appoint an EU resident fiscal representative that would share their VAT obligations and liabilities. At the moment, member states may chose whether to impose this requirement, and so sellers can pick countries to register in that do not impose this requirement. The EU is now looking at levelling the playing field by ending this
However, if the non-EU seller was resident in a state with an EU mutual assistance agreement on tax recovery, this requirement would not be imposed.
There are also proposals to enhance IOSS data exchange to identify fraud.
Revising import VAT obligations – Article 201 VAT Directive
To this end, the current rotating president of the Council of the EU, Hungary, is proposed a revision of the rules around Article 201 of the VAT Directive which determines who is liable for import VAT. It is proposing a new Article 201: “Under the incentivized IOSS approach, the supplier or deemed supplier is systematically liable for VAT at import. When the supplier or deemed supplier does not comply, the goods will not be released for free circulation,” Hungary is simultaneously proposing that the end customer would only be held liable for the import VAT, but not any penalties for their seller’s failure to comply with the rules.
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 | 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 | July 2027: 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 | |
| 3 Single VAT Registration; extension of OSS | July 2027: 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 | |
