Updates – VAT in the Digital Age Proposals

Three proposed changes to VAT legislation published recently by the European Commission which have long been discussed as potential changes which may arise. Before the changes are brought into law, unanimous approval will need to be obtained from each of the 27 EU Member States.

 

The key proposed changes are as follows:

 

1. Digital Reporting and e-Invoicing

  • Proposed introduction date of 1 January 2028.
  • An electronic invoice will now need to be issued by taxpayers within two days of a VATable supply being made and will also need to report the transaction to the relevant tax authority (i.e. Irish Revenue) within two days of the supply.
  • Currently, taxpayers have until the 15th day of the month following the month in which the supply takes place to issue a VAT invoice. In respect of reporting of cross-border transactions, currently such transactions are reported in periodic statistical monthly/quarterly VIES and/or monthly Intrastat returns.
  • Will mean invoicing and reporting of transactions will potentially be required on an almost real time basis.
  • Two main aims of this proposal:
  1. To reduce revenue lost to VAT fraud across Europe each year.
  2. To harmonise similar mechanisms around electronic invoicing and digital reporting which currently exist in some, but not all EU Member States

 

2. Platform Economy

  • Proposed introduction date of 1 January 2025.
  • There are currently certain scenarios where a marketplace, rather than the underlying supplier, is responsible for accounting for VAT.
  • New proposals targeting the short-term accommodation and transport sectors whereby the marketplace will become the deemed supplier and as such, responsible for accounting for any VAT arising on supplies, in cases where the underlying service provider currently does not account for VAT (e.g.  as it may not have breached the VAT registration threshold).

 

3. Single VAT Registration – extension of the existing OSS/IOSS

  • Proposed introduction date of 1 January 2025.
  • Proposed extension of the existing VAT One Stop Shop (“OSS”) which will allow businesses to report its output VAT on cross-border EU sales of goods and services to consumers in a single VAT return via their local tax authority in their local language.
  • The current OSS simplification covered only certain supplies of goods and services to consumers.
  • Import One Stop Shop (“IOSS”) will become mandatory for all marketplaces. Currently, the operation of the IOSS is optional for marketplaces. IOSS should continue to remain optional for non-marketplace sellers.

 

Should you have any queries in respect of the above or the implications for your business, please contact Barry McNamara ([email protected]) or Áine Casey ([email protected]).

How can we help you?

Contact us by phone on +353 (0)1 496 5388 or click below to submit your questions, comments, or proposal requests.

Email us