Περιεχόμενα Άρθρου
VAT in the Digital Age
On December 8, 2022, the European Commission announced its new legislative proposal “VAT in the Digital Age” which will contribute to the implementation of its plan to modernize the European tax system and transition to a fairer, simpler and more efficient tax system.
The European Commission has highlighted its concerns regarding the VAT gap (learn more in the FAQs) which according to its figures in 2020 amounted to €93 billion. (more than €3 billion accounted for our country).
Article to read:
Pillar 1. Digital Reporting Requirements and Electronic Invoicing
The first pillar concerns digital reporting requirements for supplies of goods and services within the EU with near-real-time transmission of transaction data from structured electronic invoices (eInvoicing).
Digital Reporting Requirements
Starting January 1st, 2028, B2B transactions within the EU must be reported electronically to the tax authorities within two working days of the invoice date. In turn, the respective tax authority will channel the data into a central database that member states can use for analysis and statistical studies.
The company will no longer be required to submit periodic EC Sales Lists, as these will be replaced by the Digital Reporting Requirements (DRR). Also, the data to be reported should be detailed for each transaction rather than aggregated for each customer.
Member States will have to ensure that before January 1st, 2028, the existing reporting systems they use are in line with the new rules.
Electronic Invoices (eInvoicing)
According to the European Commission’s timetable, the proposals on eInvoices are divided into two phases:
Phase 1
With effect from January 1st, 2024, Member States will be able to require businesses to issue invoices electronically, without further approval from the EU. The eInvoice must in this case comply with the European electronic invoicing formats. It cannot be subject to any prior validation (by the tax authorities) and/or acceptance by the customer. Member States that have already implemented a specific eInvoicing regime may continue this regime until January 1st, 2028.
Phase 2
Starting January 1st, 2028, eInvoicing will be a default option for business-to-business (B2B) transactions within the EU. Also, eInvoices should be issued within two working days.
Article to read:
Pillar 2. VAT Platform Economy
The second pillar introduces new VAT rules to address the challenges of the Platform Economy, e.g. ensuring the fair taxation of both online and traditional financial transactions, as well as ensuring that Member States adopt a uniform approach to the application of VAT rules in relation to the provider, nature and place of supply of services and reporting based on divergent and evolving business models.
Specifically, from January 1st, 2025, the regulations regarding deemed suppliers are being extended with the aim of solving existing inequalities and problems related to VAT.
Deemed providers of accommodation rental and passenger transportation services through online marketplaces/platforms.
In addition, the status of the deemed supplier will also be extended to the sectors of short-term (up to 45 days) accommodation rental and passenger transport services in the platform economy, in cases where the said supplier does not charge VAT, for example, because it is a non-taxable person (e.g., private person) or because he makes use of the VAT exemption (e.g., small company).
Mandatory use of the IOSS system by platforms considered suppliers for imports of consumer goods.
Furthermore, the use of the existing IOSS system will be mandatory for online marketplaces/platforms that facilitate, as deemed suppliers, the conduct of remote sales of imported goods.
Pillar 3. Single VAT Register
The main objective of the third pillar of the initiative is to eliminate the need for registration in multiple VAT registers through the One Stop Shop service, as well as to improve its operation for the declaration and payment of VAT due to distance sales of goods.
Specifically, the implementation of the initiative will offer companies operating in the EU the opportunity to be registered in a member state and pay VAT there. In this way, the process will be simplified for all companies involved in the e-commerce value chain, as their obligations to achieve tax compliance are reduced.
In addition, new rules will come into effect from January 1st, 2025, aimed at limiting situations where companies are forced to register in Member States where they are not established.
Among other things, the new rules concern:
- extending the existing OSS (Union scheme) to also cover supplies of goods with installation or assembly, goods on board ships, aircraft, trains, supplies of natural gas, electricity, heating, and cooling, as well as domestic supplies of goods,
- the extension of the existing non-Union scheme to also cover the provision of services to consumers within the European Union by taxable persons established outside the European Union,
- the extension of the deemed supplier rule to also cover all intra-EU deliveries of goods facilitated by online markets/platforms, regardless of where the deemed supplier is established and regardless of the status of the buyer. In addition, a deemed supplier rule will apply to certain transfers of own goods facilitated through an electronic interface. This will further ease VAT obligations for EU sellers leveraging sales through online platforms,
- the mandatory use of the Import One Stop Scheme (IOSS) for online marketplaces/platforms (deemed suppliers) that facilitate sales of imported goods.
Article to read:
Frequently Asked Questions (FAQs)
What is the VAT Gap
The VAT Gap is the difference between the expected tax revenues of the EU and the tax revenues collected.
What causes the VAT Gap
The VAT Gap is caused for a multitude of reasons, including fraud, VAT avoidance, optimization practices, corporate bankruptcies, corporate insolvency and miscalculations and administrative errors.
Ηow the European Commission aims to shrink the VAT Gap
The European Commission with its new “VAT Gap Initiative” will strengthen the sharing of ideas between Member States and the adoption of more effective practices, as well as in conjunction with the “VAT in the Digital Age” initiative will modernize the VAT collection and significantly reduce the VAT Gap.
How can QBC help you?
Following the latest developments in tax legislation and having the necessary know-how, QBC Tax Consultants are at your side to help you achieve maximum tax compliance and benefit for your business.
Through accounting outsourcing and supervision services, QBC supports businesses in evaluating and restructuring their existing accounting systems to make them more efficient and effective.
For more information on corporate tax and accounting, you can contact us by phone at 216 900 7576 or submit a contact request and one of our Consultants will serve you immediately.
