Goals of the reform
As in the past, the VAT system is to be made more resistant to fraud and simplified. In order to achieve this, it is important to expand and promote digitalisation in VAT law. This is also intended to meet the challenges posed by the development of the "platform economy".
What is changing?
The following measures are planned:
From 1.1.2024
EU Member States will be allowed to introduce the obligation to issue invoices electronically, in line with the EU standard. An electronic invoice is defined as an invoice document that is created in an electronic format and enables automated and electronic processing. PDF documents are no longer considered electronic invoices.
From 1.1.2025
The following measures are intended to avoid registration in other EU Member States and achieve a single VAT registration:
The reverse charge procedure will be extended. For this purpose, all supplies, with the exception of those subject to margin taxation, will be included in the reverse charge procedure if the supplier is not established in the Member State where the supply is made and the recipient of the supply (B2B) is registered for VAT there.
The OSS procedure will be extended so that all B2C transactions for which registration in another EU Member State would be required can be reported via this.
Intra-Community transfers can be reported via the OSS procedure. This does not apply to intra-Community transfers of capital goods and goods for which there is no entitlement to full input tax deduction.
For sales involving the cross-border transport of goods within the EU that take place via online marketplaces, the operator of the online marketplace is notionally included in the supply chain. Currently, this only applies to certain supplies related to the third country.
The same will be introduced for short-term rentals and passenger transport distributed via online portals. Here, too, a supply chain is fictitious. As a result, end consumers will be charged VAT for these services, which was often not the case until now.
The consignment stock regulation, which was only introduced on 1.1.2020, will be abolished, as it is largely superfluous due to the aforementioned measures.
From 1.1.2028
The reporting obligations will be digitalised. For this purpose, the recapitulative statement (ZM) will be replaced by short-term digital reporting obligations (DMP) and electronic invoicing for intra-Community services will become mandatory. The electronic invoices must be issued within two working days of the performance of the service. The corresponding turnover must be reported via the DMP within two further working days at the latest.
In addition, there is a general obligation for electronic invoicing. Invoices deviating from this, e.g. in paper form, may only be accepted by the EU member states if they are not subject to the DMP.
Consequences
This is still a draft. However, it is to be expected that essential parts of it will be implemented. For businesses operating in the EU, the draft will bring simplifications (Single VAT Registration) and new challenges (DMP, electronic invoicing). Note that other EU member states have long since introduced regulations on electronic invoicing and real-time data reporting. There may be an acute need for action here now rather than in the next few years.
It is important for you to check whether you are affected by the changes. Only then can you take the necessary measures in time to prepare for this. We will support you by keeping you informed about further developments here or via our blog. If you already have specific questions, our VAT experts will be happy to help you.