European Union | Tungsten Network

Group on the future of VAT – e-invoicing and the need for EU standards and interoperability

Ryan Golds — Thu, 07 Jul 2022 06:59:06 +0000

The Group of the Future of VAT has discussed the “Working Paper on E-invoicing and the need for EU standards and interoperability” published by the European Commission. The study carried out on the Digital Reporting Requirements (DRR) part of the VAT in the Digital Age concludes that the policy options providing the most significant advantages are the partial and total harmonisation of DRRs across the EU.

More details around this can be found here.

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Extension of fraud reverse charge measure

Ryan Golds — Thu, 28 Apr 2022 07:31:29 +0000

An overriding objective relating to the implementation of e-invoicing has always been to reduce VAT fraud. A specific means to achieve this is through the reverse charge mechanism.

The reverse charge mechanism is where liability to pay the VAT shifts to the buyer rather than the supplier.

This is important, as cross-border transactions in theory, by virtue of intra-community supplies, should be subject to zero VAT. However, to exploit this, it is possible to sell goods / services domestically, charge and then pocket the VAT. The reverse charge counters this as responsibility to pay VAT lies with the buyer, and not the supplier.

It has been proposed that this is extended until 31 December 2025.

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Public consultation – VAT in the digital age

Ryan Golds — Thu, 28 Apr 2022 07:31:09 +0000

The duration of the public consultation in the digital age has been extended until 5 May 2022.

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European Parliament and the harmonisation of e-invoicing

Ryan Golds — Thu, 28 Apr 2022 07:30:46 +0000

One of the underlying aims of the European Parliament has been the harmonisation of e-invoicing across Member States. This naturally will lead to increased automation, efficacy and reduced costs associated with the e-invoicing process.

To this effect, the European Parliament has called on the European Commission to set up a common standard by 2022.

In related objectives, there is also a request to consider the role of e-invoicing in real-time reporting. We have already seen some EU Member States such as Hungary successfully deploy this.

Following the success of mandate in Italy in significantly reducing the VAT gap, the European Parliament has called for a gradual adoption of obligatory e-invoicing- with an emphasis on small and medium enterprises (SMEs). Considering the upcoming French mandate, there has also been renewed interest to consider the needs of this particular group of taxpayers, and it looks like this this is gaining traction in Europe, too. Furthermore, there is a call for invoices to only be administered via certified systems to ensure full data protection.

By 2023, it is anticipated that the system will produce compliant documents for taxpayers, again with a focus on SMEs.

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European parliament resolution: how to reduce the VAT gap

Ryan Golds — Wed, 23 Mar 2022 12:55:32 +0000

On 16 February 2022, the European Parliament published a resolution on the implementation of the Sixth VAT Directive (2020/2263(INI), concerning how the VAT gap can be reduced.

The main incentives behind the report were to make improvements to the current Directive and establish a more streamlined, simple, fraud-proof and effective VAT system. It is envisaged that digitalisation will be a means to achieve these aims.

The website of the European Parliament provides further details around this.

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VAT in the digital age – public consultation

Ryan Golds — Fri, 04 Feb 2022 00:00:00 +0000

The European Commission has launched the public consultation on the “VAT in the Digital Age” initiative. The underlying aims of this initiative include ensuring the proper functioning of the single market, reducing business compliance costs and promoting economic interests of the EU and Member States.
The Commission is seeking feedback on VAT reporting obligations and e-invoicing, VAT treatment in the digital age and single EU VAT registration. The Commission aims to put forward legislative proposal in the latter part of the year to this effect. It is clear that a major initiative of the consultation is to harmonise fiscal measures across Europe.
The public consultation is open for 12 weeks from 21 January 2022 – 15 April 2022.

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EU Council reaches agreement on updated rules for VAT rates

Ryan Golds — Tue, 04 Jan 2022 00:00:00 +0000

On 7 December 2021, the EU Council received an agreement to update EU rules on VAT, the purpose of which was to ensure that member states are treated equally, with the bonus of allowing more flexibility to apply reduced and zero rates. There is also a ‘green’ initiative behind the rules, to phase out preferential treatments for environmentally harmful goods.

The EU Council also updated the list of goods and services for which reduced VAT rates are allowed (Annex 111 of the VAT Directive). The Council decided to limit the number of items to which reduced rates could be applied, recognising that these could accumulate.

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Publication of the new VAT Gap report (2021)

Ryan Golds — Tue, 04 Jan 2022 00:00:00 +0000

EU Member States have lost an estimated 134 billion euros in VAT revenues in 2019 according to the 2021 Report on the VAT Gap released by the European Commission. The VAT Gap did decrease between 2015-2019, but remains very significant. The report can be found here.

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EU Commission work program 2022

Ryan Golds — Fri, 12 Nov 2021 00:00:00 +0000

The EU has been working towards the modernisation of current VAT rules in the commission Work Programme 2022. This Programme highlighted the importance of taking the opportunity to use digital solutions as a means to achieve this. As part of their action plan, they have announced a legislative proposal for 2022, covering VAT obligations and e-invoicing.
Further details can be found on the report published on their website.

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