VAT in the Digital Age: EC is considering standardized electronic VAT invoicing for intra-EU transactions.

The European Commission (EC) started a public consultation that may result in standardized electronic VAT invoicing for intra-EU transactions. Through the Call for Evidence, the EC seeks feedback from companies and tax authorities on numerous policy ideas. The authorities are weighing non-legislative options including a complete harmonization of VAT reporting obligations. It should be noted that full harmonization would need current member states to assure the interoperability and midterm convergence to the unified EU system. 

The action plan for  fair and simple taxation emphasizes the need to think about how tax authorities might utilize technology to combat tax fraud. Moreover, it aims to help companies conducting business in the digital sector comply with the present VAT laws more efficiently. It is announced in the action plan that a legislative proposal will be submitted in 2022 as 

‘VAT in the digital age.‘  

Topics to be addressed are as following:

• VAT reporting requirements and electronic invoicing
• VAT treatment for the platform economy
• Single VAT registration for the whole of the EU 

In 2019, the EU lost EUR 134 billion due to VAT leakage. At least 13 EU nations have or intend to use e-invoicing. Proposing to harmonise digital sales tax reporting responsibilities and e-invoicing standards can mitigate the increasingly complicated invoicing environment and administrative issues for businesses 

The Organization for Economic Cooperation and Development (OECD), which has negotiated numerous high-profile international corporate tax accords and ensured some uniformity on indirect tax, is also scrutinizing e-invoicing. The OECD plans to release an e-invoicing report in the second part of the year. 

Source: VAT in the digital age