In January 2022, the European Commission launched a consultation among Member States on VAT in the digital age, to find out what respondents expect them to do to adapt the law to the changing environment. The European Commission's action plan also aims to make new technologies available to help tax authorities to fight tax fraud. The consultation ran until May 5. Here are some words about the results.
Results of the VAT consultation
Almost 200 respondents took part in the survey. They were mainly large companies (250+ employees). The country with the highest number of responses was Germany (54 companies). Just behind them were Belgium (29 responses), Italy (18 responses) and France (12 responses).
Considering the current situation in the EU, the majority of respondents evaluate negatively the effects that Digital Reporting Requirements to carry out current business operations (hereafter: DRR). This includes SII in Spain, SAFT's, Hungary invoice reporting, e-invoicing as general process, EC Sales List, and so on.
The vast majority of respondents indicated that there is currently no guidance in the EU on the introduction and operation of DRR, and this results in fragmented rules, unnecessary costs for companies operating across borders, and uncertainty in doing business.
Over two-thirds of respondents perceived to a large extent that EU action is necessary in ensuring a more widespread adoption of digital reporting and e-invoicing requirements, with focus on the introduction of an EU DRR – at least at first – for intra-EU transactions. At the same time, domestic systems should share on an obligatory basis to avoid further fragmentation. In addition, Member States have made it a point to move away from the need to seek permission to introduce mandatory e-invoicing in B2B relationships in their country.
Further e-invoicing plans
Amendments to the VAT Directive should be published at the end of 2022, taking into account the voices of the companies participating in the survey and reflecting their moods. An additional strengthening of the voice of entities conducting business activity is the call of the European Parliament to the European Commission to:
- Set up a harmonized common standard for e-invoicing across the Union without delay, and by 2022 to reduce the cost of the creation of fragmented, different system across the Member States
- Establishing the role of e-invoicing in real-time reporting
- Explore the possibility of a gradual introduction of obligatory e-invoicing across the Union by 2023, focusing on a significant reduction of costs of compliance, especially for SMEs. Issuing invoices should be administered only via state-operated/certified “system(s)” with full data protection ensured.
Bearing in mind the above, we can be pretty sure that the coming months will bring plenty of significant changes in VAT fields, and a lot of work for e-invoicing solution providers and taxpayers, especially for those conducting cross-border business.