EU consultation on proposed changes to VAT

As part of the ‘VAT in the Digital Age’ agenda, the EU is currently asking for feedback on the VAT system in a new consultation which could lead to far reaching changes. In a bid to assess if the current VAT rules are still fit for purpose, these changes could include how VAT is accounted for, easements being created for access to the EU market by non-EU businesses and new requirements on the data that needs to be collected and declared.

The full consultation will end on Friday 15 April 2022. The outcome could define the VAT compliance landscape for the next decade and your feedback is important to ensure those changes are as business friendly and burden reducing as possible.

We intend to respond to the consultation and would like your help with forming our provided opinions. We would be grateful if you could spare a few minutes to read the following information.

The consultation

The consultation is focussed on three specific areas.

1. Digital reporting requirements – what information should be provided to tax authorities and how that happen
2. The treatment of the platform economy – looking at whether marketplaces and other “providers” should become more accountable for VAT due on the supplies they help to facilitate
3. A single VAT registration in the EU for certain B2B supplies and an extension of the existing Import One Stop Shop (IOSS) scheme

The areas for consultation will impact all businesses across different industries.  Some of the key points that the consultation is looking at are listed below:

• Abolishing the threshold for use of the Import One Stop Shop (IOSS) from its existing €150, making it mandatory so any value packages could go via this route.
• Having a single EU VAT registration to manage the supply of B2B goods and services within the EU. To also consider whether input tax could be recovered via that single registration or if it would have to be recovered via existing mechanisms.
• Universal adoption of reverse charge measures for B2B supplies made by non-established businesses.
• Standardisation of real time reporting and e-invoicing requirements across the different Member States.

Whilst there is no guarantee that the EU will adopt any of these changes, it is good to see it take feedback on the matter. It does give businesses a chance to have a say and potentially some practical changes made to ease their administrative burdens of managing VAT.

How you can help

We have helped many businesses, both from the UK and EU, to manage the changes that occurred in 2021 as a result of Brexit and the EU’s e-commerce directive.  We understand how difficult it has been for many to adapt and are aware of how reducing the burden of compliance would help.

We would, however, still love to hear your views on the changes that are being proposed. Any feedback you can provide would help us greatly and be included in our response.  You can participate by responding with an email or we are happy to schedule a call.

How to participate

Please contact [email protected] with your thoughts or to schedule a call to discuss them further. We will need to compile all feedback in advance of the deadline on Friday 15 April 2022.

If you have any questions on the above please do not hesitate to contact your usual VAT contact or Rob Janering.

Thank you in advance.