On the draft Council directive amending Directive 2006/112/EC as regards VAT rules for the digital age

On 8 December 2022, the Commission presented the ‘VAT in the digital age’ package (ViDA), which consists of three proposals:

 a proposal for a Council directive amending directive 2006/112/EC as regards VAT rules for the digital age;

 a proposal for a Council regulation amending regulation (EU) No 904/2010 as regards the VAT administrative cooperation arrangements needed for the digital age

 a proposal for a Council implementing regulation amending implementing regulation (EU) No 282/2011 as regards information requirements for certain VAT schemes.

The package developed an action plan for fair and simple taxation that emphasized the need to reflect on how technology can be used in the fight against tax fraud and how the current VAT rules in the European Union could be adapted for doing business in the digital age. The three changes to make VAT fit for the digital age are

i) a new real time digital reporting system based on e-invoicing,

ii) update VAT rules for the platform economy and

iii) a single vat registration for businesses selling to consumers across the EU.

The directive and the regulation were subject to a special legislative procedure. The European Parliament was consulted and delivered its opinion on 22 November 2023.

On 5 November 2024, the Council agreed on the ViDA package. However, given the substantial differences between the Commission’s proposal (i.e. the Directive) on which the European Parliament was initially consulted and the text of the Council, the Council decided on 7 November 2024 to re-consult the European Parliament.

The deemed supplier regime was a significant point of contention within the Council, making it particularly challenging to reach a final compromise.

The Council decided that the deemed supplier rules will be introduced first on a voluntary basis as from July 1, 2028, and then mandatory as from January 1, 2030. Member States will also be authorised to exempt SMEs from the deemed supplier regime without having to report to the VAT committee. In its first opinion, the EP highlighted the need to limit the administrative burden for SMEs.

The Council also introduced more flexibility for Member States to operate their own invoicing systems as many member states have already invested heavily in their own software. Summary invoices are also reintroduced under certain conditions despite the Commission’s proposal to prohibit them. The Parliament also favoured the reintroduction of summary invoices in order to keep flexibility and simplicity for Member States and businesses.

On the implementation deadlines, the Parliament opinion suggested longer deadlines than in the Commission proposal. The Council even further extents the deadlines beyond the Parliament’s proposals.

Therefore, the rapporteur is of the view that a simplified procedure without amendments is the relevant procedure.

The rapporteur declares under his exclusive responsibility that he did not receive input from any entity or person to be mentioned in this Annex pursuant to Article 8 of Annex I to the Rules of Procedure.