On 14 May 2024, the VAT in the Digital Age ("ViDA") Package was considered during a meeting of the EU's Economic and Financial Affairs Council (ECOFIN). During the meeting, the Council exchanged views on the ViDA package, but political agreement was not reached on all aspects of the Package.
The ViDA Package aims to support the digital transition of the EU, enhance cross-border trade and combat VAT fraud. The ViDA Package consists of amendments to three pieces of EU legislation: the VAT Directive (2006/112/EC), Council Implementing Regulation (EU 282/2011) and the Council Regulation on Administrative Cooperation (EU 904/2010). The package has three main objectives –
- Digital reporting requirements ("DRR") – these proposals aim to modernise the VAT reporting obligations by introducing digital reporting requirements, which will standardise the information that needs to be submitted by taxpayers on each transaction to the tax authorities in an electronic format and impose the use of e-invoicing for cross-border transactions.
- Platform economy – these proposals seek to address the perceived challenges of the platform economy, by amending the VAT rules applicable to the platform economy to clarify the place of supply rules applicable to these transactions and increasing the role of the platforms in the collection of VAT when they facilitate the supply of short-term accommodation rental or passenger transport services.
- Single VAT registration – these proposals aim to remove the need for multiple VAT registrations in the EU by improving and expanding the existing systems of One-Stop Shop (OSS) / Import One-Stop Shop (IOSS) and the application of reverse charge provisions in order to minimise the instances in which a taxpayer is required to register in more than one Member State.
The DRR and single VAT registration pillars were approved by ECOFIN. However the platform economy proposals were not approved, with Estonia maintaining its objection by using its veto against the use of the 'deemed supplier' rules for the platform economy in transport & accommodation sectors. Estonia reportedly is concerned with the impact of the deemed reseller rule on small and medium sized enterprises ("SMEs") and called for the platform pillar to be voluntary for Member States on an opt-in basis. The Belgian Presidency has accommodated this concern by providing the Member States with the option to prevent the deemed supplier regime from applying to SMEs. However, Estonia maintains its objection to this compromise position.
The Council confirmed that it will continue to work towards an agreement, with the next ECOFIN meeting scheduled for 21 June 2024. A new European Parliament will be formed following elections in June and therefore, the ViDA Package is subject to significant time pressure. The Council is bound by unanimity and therefore, this can lead to delays and challenges in reaching agreement on tax proposals where there are significant national specificities to consider. However, the Belgian Presidency of the Council has stated that it is committed to securing an agreement on the ViDa Package before the end of its presidency in June.
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