On 21 January 2022, the European Commission (EC) launched a public consultation on the new legislative package forming part of its plan “VAT in the Digital Age”, namely:
- Single VAT registration
- Digital Reporting Requirements (DRR) and e-invoicing
- VAT treatment of the platform economy
The consultation, that seeks feedback from businesses, academics, Member States and other interested parties, is open until 15 April 2022 and contributions can be submitted at the Commission site .
As mentioned, one of the intended reforms refers to the introduction of harmonised Digital Reporting Requirements (DRR) rules across the 27 member states, with four possible alternatives, namely:
- No change and maintain the status quo (unlikely to be the one adopted).
- Optional EU core designed DRR.
- Taxpayer transactional data storing obligations meeting the standards for the recording and storage of transactional data set by the EU (this would be similar to the existing on-demand model for many European SAF-Tregimes).
- EU DRR scheme with further choice over partial or full harmonisation
a. Partial harmonisation DRR, with two possible scopes:
- intra-community transactions (and withdrawal of Intrastat and Recapitulative Statements).
- Optional domestic transaction reporting system for domestic transactions. This could include existing domestic regimes which would have to converge with the future EU intra-community transaction system.
b. Full harmonisation DRR, including all domestic and intra-community transactions being submitted at the EU level. As above, recapitulative statements would be withdrawn, and member states with existing DRR systems would have to adapt to the EU system.
Furthermore:
a. When considering an EU DRR scheme (option 4), there is another choice to be made regarding which of the two possible reporting alternatives is adopted:
- Continuous Transaction Control (CTC), including pre-clearance e-invoicing such as Italy SdI or live reporting as happens in the Spain SII or Hungary RTIR
- Periodic Transaction Control (PTC), VAT listings (SAF-T) post-invoice issuance reporting model.
b. Lastly, member states will have to decide the type of transactions to be included: B2G, B2B, B2C, exempted etc.
Other issues that are covered by the consultation are:
- Should there be a reporting threshold be set for small and medium sized companies?
- Could any other taxpayers or sectors be exempted, and should this be a member state choice?
- How could pre-filled VAT returns and other benefits (such as speedy credit refunds) be included as a benefit. Should this be left to member states to decide on implementation?
- What other obligations could be withdrawn besides Recapitulative Statements?
The plans of the European Commission are to have a draft of the new VAT Directive changes for Autumn 2022.