VAT in the Digital Age: new rules proposed

E-invoicing
Starting 1 January 2024, Member States may require businesses to issue e-invoices. The e-invoice must in that case comply with European e-invoicing formats. It may not be subject to any prior validation (from tax authorities) and/or acceptance by the customer. Member States that have already implemented a certain e-invoicing regime may continue this regime until 1 January 2028.

Taking effect 1 January 2028, e-invoicing will become the default for intra EU B2B transactions.  E-invoices must be issued within two working days after the transaction takes place. Member States may still authorize paper invoices in domestic situations.

Transaction based reporting
As per 1 January 2028, intra-EU B2B transactions must be reported to the tax authorities electronically within two working days from the invoice date. It will no longer be required to submit periodical EC Sales Listings. Member States shall provide for the electronic means for submitting such transactions and may also require domestic and other transactions to be reported in a transaction-based way. Member States should make sure that before 1 January 2028 existing reporting systems are in line with the new rules.

Taking effect 1 January 2025, VAT reporting liabilities will be further centered around digital intermediary platforms.

The existing VAT liability for platforms facilitating supplies of goods within the EU will be extended to capture all B2C and B2B supplies of goods regardless of where the supplier is located. It will also become mandatory for platforms facilitating B2C distance sales of imported goods with a low consignment value to account for VAT through the Import One Stop Shop arrangement (I-OSS). The European Commission further intends to implement flanking measures to prevent I-OSS number VAT fraud. 

A new VAT liability will be introduced for platforms facilitating services relating to short-term accommodation rental and passenger transport. This liability will apply if the actual supplier is not liable for VAT itself, for example due to the small businesses scheme. These service platforms will also be required to collect and store information regarding services relating to short-term accommodation rental and passenger transport for which it is not held liable for VAT. 

Another new VAT liability will be introduced for fulfillment platforms facilitating the intra-EU shipments of own goods by businesses. These rules are aimed at platforms that operate a fulfillment warehouse, from which businesses supply their products.

The VAT place-of-service rules will be amended to achieve that VAT on B2C facilitation services provided by all platforms will become due in the Member State where the underlying transaction takes place.

The ViDA initiative aims at decreasing businesses’ VAT compliance obligations by taking away the need to maintain foreign VAT registrations. As a result, businesses will only have to maintain one single VAT registration in one Member State.

On 1 January 2025, a mandatory VAT reverse charge mechanism will be introduced for all B2B supplies of goods and services where the supplier is not established in the Member State in which VAT is due and its customer maintains a VAT registration in that Member State. Further, the scope of the existing One Stop Shop (OSS) scheme will be extended to cover domestic supplies of goods by suppliers that are not established in the Member State in which VAT is due. This includes for example domestic supplies and installation supplies of goods.

Also taking effect 1 January 2025, a new scheme will be implemented to report all cross-border transfers of own goods within the EU. Call-off stock can also be reported in this scheme. During 2025, the current scheme can still be applied to call-off stock arrangements which are in place at the latest on 31 December 2024.