EU VAT in the Digital Age (ViDA) public consultation

Feedback from tax payers and EU states positive but there are concerns on ‘very ambitious’ timetable

EU member states, their parliaments and businesses, professional associations held a public consultation on the 3-pillar ViDA reform.

Tax authorities are generally concerned about meeting the deadlines for IT changes and upgrades as detailed final requirements are not yet available.

Typically, at least 18 months’ implementation preparation is required from agreement.

This indicates that some of the planned steos will have to be postponed to a later time, such as the DRR which is seen as the most impactful pillar of ViDA in terms of number of businesses affected.

Main steps are:

  1. 2025 Single VAT Registration and the OSS extension:
    • Some states are questioning the potential disproportionate ‘deemed supplier’ extension on e-commerce platforms for EU-resident sellers goods sales.
    • Like all of the proposed pillars, more work is needed on definitions, for example the position of auction platforms.
    • The continuing prohibition of deducting input VAT via the OSS is raised by businesses – although it is well known that member states are against this.
    • Several business groups request a plan to integrate Intrastat into the OSS regime.
  2. 2025 Platform economy:
    • Possibly the pillar facing the widest divergence of opinions with complex business models and the EC’s approach to attempt to tax the gig sharing economy.
    • There is a need to narrow the definition of intermediary and ‘platform facilitating’ to prevent many other activities being drawn in. This latter requirement may yet derail the reforms according to some parties given the dynamism of the evolving business models and the risk of creating IT barriers to entry for new platforms
    • Risks over double taxation of platform deemed supplier services and intermediary services.
  • 2024-2028 Digital Reporting Requirements:
  1. Whilst supportive of the DRR objectives – efficiency and anti-fraud – of the package, many parties are concerned about the short timetables and associated costs. Particularly for the smallest of enterprises and how it may discourage intra-community trade.
  2. Suggestions for a phased implementation of e-invoicing and digital reporting.
  3. The 2024 proposed withdrawal of the requirement for member states to seek EC approval to introduce e-invoice regimes is well received.
  4. Concerns that such an early move – ahead of the 2028 harmonisation changes – would open-up a period of legislative uncertainty and rush by some to implement costly unharmonised regimes.
  1. 3.1 e-Invoicing
    • The requirement for all businesses to be able to accept their suppliers’ e-invoices for domestic transactions from January 2024.
    • This is an extremely short notice period, and will heavily favour larger businesses with the resources to adapt. There are several requests to delay the change to at least January 2025.
    • Some taxpayers have questioned the prohibiting of PDF digital signature invoices since they have proved effect in the same objectives as structured e-invoices.
  2. 3.2 Digital reporting
    • Widespread concern for the 2-day reporting timetable for digital reporting of Intra-Community Supplies from 2028. Most contributors repeated that this is unrealistic for supplies received. Many point out that this would be shorter than natural systems (EPR’s and Accounts Payable routines) work and would undermine businesses’ controls over purchasing and cash flows.
    • More clarifications and justifications are required for which transactions are within digital reporting.

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