The final report on VAT in the Digital Age has been published. The purpose of the report is two-fold, firstly to assess the current status quo with regard to the three work streams under the initiative’s scope (i.e. a move towards a single VAT return, the platform economy, and digital reporting requirements). Second, the report aims to assess the impacts of a number of possible different policy initiatives in each area. The report is intended to feed into the preparation of an Impact Assessment by the European Commission, to accompany possible legislative or non-legislative initiatives across the workstreams.
In relation to e-invoicing and digital reporting, the European Commission’s legislative proposals will be released on November 16, 2022. Possible areas that have been discussed and debated and included in the public consultation or the study include:
A move to a harmonised common standard for e-invoicing across the EU (most likely encouraging the acceptance of the main European e-invoicing standard (EN 16931) for domestic B2B e-invoicing)
The gradual introduction of obligatory e-invoicing across the EU, as well as the removal of the current pre-requisite for European member states to obtain a formal derogation to introduce mandatory B2B e-invoicing.
While some of the above e-invoicing initiatives may appear in the final legislative proposal, it is likely that the main initiative will be a new pan-European digital reporting requirement (DRR) that will replace the current EC Sales List requirement. The transactional data to be submitted under this new DRR requirement is likely to be a subset of e-invoice transactional data. It would run in parallel to the wave of domestic e-invoicing mandates that are already slated to be introduced across the EU (including France, Spain, Poland and Belgium). The reporting model is unlikely to follow the clearance model, but would have a wide scope i.e. covering both B2B and B2G, domestic and cross-border supplies, and applicable to all taxpayers regardless of size.
