Explanatory Memorandum to COM(2022)704 - Amendment of Implementing Regulation (EU) No 282/2011 as regards information requirements for certain VAT schemes - Main contents
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| dossier | COM(2022)704 - Amendment of Implementing Regulation (EU) No 282/2011 as regards information requirements for certain VAT schemes. |
|---|---|
| source | COM(2022)704  |
| date | 08-12-2022 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
This proposal is part of the package of legislation on the VAT in the Digital Age initiative, together with a proposal for a Council Directive on amending Directive 2006/112/EC as regards VAT rules for the digital age 1 , and a proposal for a Council Regulation amending the Regulation (EU) No 904/2010 as regards the VAT administrative cooperation arrangements needed for the digital age 2 . The context of this initiative is set out comprehensively in the explanatory memorandum to the proposal for a Council Directive amending Directive 2006/112/EC 3 .
This explanatory memorandum describes the necessary modifications to Council implementing Regulation amending Council Implementing Regulation (EU) No 282/2011 as regards information requirements for certain VAT schemes.
This package has three main objectives:
Modernising VAT reporting obligations 4 , by introducing Digital Reporting Requirements, which will standardise the information that needs to be submitted by taxable persons on each transaction to the tax authorities in an electronic format. At the same time it will impose the use of e-invoicing for cross-border transactions;
Addressing the challenges of the platform economy 5 , by updating the VAT rules applicable to the platform economy in order to address the issue of equal treatment, clarifying the place of supply rules applicable to these transactions and enhancing the role of the platforms in the collection of VAT when they facilitate the supply of short-term accommodation rental or passenger transport services; and
Avoiding the need for multiple VAT registrations in the EU and improving the functioning of the tool implemented to declare and pay the VAT due on distance sales of goods 6 , by introducing Single VAT Registration (SVR). That is, improving and expanding the existing systems of One-Stop Shop (OSS)/Import One-Stop Shop (IOSS) and reverse charge in order to minimise the instances for which a taxable person is required to register in another Member State.
Elements of the package require implementing measures, in particular those relating to the VAT treatment of the platform economy and the single VAT registration. These will ensure that key elements are applied equally across the Member States, giving legal certainty for businesses and tax administrations.
• Consistency with existing policy provisions in the policy area
This proposal is part of the package of legislation on the VAT in the digital age initiative. The consistency of the package as a whole is set out comprehensively in the explanatory memorandum of the proposal for a Council Directive amending Directive 2006/112/EC.
• Consistency with other Union policies
The VAT in the Digital Age initiative runs alongside other Commission initiatives relating to the Digital Economy, such as the Digital Services Act 7 , the recent proposal for a Directive to improve working conditions in platform work 8 , and the ongoing work relating to short-term accommodation rentals 9 . The general approach taken in these initiatives is to require platforms to be more transparent, including by providing relevant information, in relation to their users (e.g. short-term accommodation rental providers; or platform workers) and facilitate compliance by the users of their service with the relevant regulatory requirements.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The proposal is based on Article 397 of the VAT Directive. This Article provides that the Council, acting unanimously on a proposal from the Commission, shall adopt the measures necessary to implement the Directive.
• Subsidiarity (for non-exclusive competence)
This proposal is part of the package of legislation on the VAT in the digital age initiative. The subsidiarity of the package as a whole is set out comprehensively in the explanatory memorandum of the proposal for a Council Directive amending Directive 2006/112/EC.
This proposal accompanies that in that it provides for measures which ensure the VAT Directive is implemented effectively.
• Proportionality
This proposal is part of the package of legislation on the VAT in the digital age initiative. The proportionality of the package is set out comprehensively in the explanatory memorandum of the proposal for a Council Directive amending Directive 2006/112/EC.
This proposal accompanies that in that it provides for measures which ensure the VAT Directive is implemented effectively.
• Choice of the instrument
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex-post evaluations/fitness checks of existing legislation
A summary of ex-post evaluations and fitness checks of existing legislation is provided in the explanatory memorandum of the accompanying proposal to amend the VAT Directive.
• Stakeholder consultations
Extensive information on stakeholder consultations is provided in the explanatory memorandum of the proposal to amend the VAT Directive.
• Collection and use of expertise
The Commission used the analysis carried out by Economisti Associati S.r.l., for the “VAT in the Digital Age” study (running from October 2020 to January 2022) 10 . The final report was submitted on 1 April 2022 and the study has been published on the Commission's website.
The study’s aims were to:
evaluate the current situation with regard to the digital reporting requirements, the VAT treatment of the platform economy, the cases still triggering VAT registration in a Member State in which a trader is not established, and the Import One Stop Shop;
assess the impacts of a number of possible policy initiatives in these areas.
• Impact assessment
The impact assessment for the proposal was considered by the Regulatory Scrutiny Board on 22 June 2022. The Board gave a positive opinion to the proposal with some recommendations that have been taken on board. The Board’s opinion and recommendations are included in Annex 1 to the staff working document for the impact assessment accompanying this proposal. The executive summary sheet is available at the following page: https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13186-VAT-in-the-digital-age_en .
• Regulatory fitness and simplification
A detailed analysis of the regulatory fitness and simplification is provided in the explanatory memorandum of the accompanying proposal to amend the VAT Directive.
• Fundamental rights
4. BUDGETARY IMPLICATIONS
The budgetary impacts are presented in the explanatory memorandum of the accompanying proposal to amend the VAT Directive.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
These elements are presented in the explanatory memorandum of the accompanying proposal to amend the VAT Directive.
• Explanatory documents (for directives)
• Detailed explanation of the specific provisions of the proposal
A definition of the term ‘facilitates’ is provided in order to provide for a degree of legal certainty concerning the scope of the deemed supplier regime.
For the effective operation of the deemed supplier regime for passenger transport and short-term accommodation rental, it is necessary to clarify how the platform can identify whether the deemed supplier regime applies, this being where the underlying supplier does not provide the platform with a VAT number.
In addition, it is stipulated that, in circumstances in which the underlying supplier is in possession of a VAT identification number but does not charge VAT (for example because they are using the special scheme for small enterprises in a Member State which provides a VAT identification number for such businesses), then that supplier should not provide the platform with this VAT identification number.
Further, it is clarified that the platform should not be held liable where the information provided by the underlying supplier is incomplete or erroneous, and that the platform can consider the customer receiving the underlying supply as a non-taxable person where they do not provide a VAT number.
On 1 July 2021 the VAT e-commerce package entered into application. As of that date, taxable persons carrying out distance sales of goods within the EU or making distance sales of imported goods into the EU can opt to make use of the One-Stop Shop system (OSS) or Import One-Stop Shop system (IOSS). Alternatively, they can still identify for VAT in the Member State of arrival of the goods or import goods using the standard importation rules and pay VAT at the border.
Following the first year of application, some issues were identified that needed further clarification and are reflected in the proposal to modify the VAT Directive. Further details thereof are included in this proposal.
In the framework of Eurofisc, the antifraud experts mentioned they are facing serious challenges to detect risk on non-payment of VAT and to control the compliance of businesses in a timely manner. This is because of the lack of granular data when the information is kept and transmitted by the platform acting as deemed supplier, since the information transmitted contains aggregated information on all underlying sellers using their platform.
In addition, when making reconciliations of the information on the supply and the payment related thereto based on data available in CESOP (payment data refers to individual payees=sellers), tax authorities need to know the taxable persons that will actually receive the payment. This is especially challenging when the deemed supplier rules apply.
For both reasons mentioned above, transmission of the underlying supplier’s identification information from the platforms to the tax authority of the Member State of identification is necessary.
At the same time a new simplification scheme in the One-Stop Shop will be set up to allow for the reporting of transfers of own goods to another Member State. Again, the detailed provisions are laid down in this proposal.
Finally, the proposal to modify the VAT Directive will make the use of the IOSS obligatory for marketplaces. Therefore, the current rules, laid down in the Council Implementing Regulation in relation to the consequences of a taxable person no longer qualifying to use the scheme, are adapted.
The modifications and additions to Article 57a complete the definitions that apply to the existing OSS schemes (Union and non-Union scheme) by including the new simplification scheme for transfers of own goods;
The new paragraph 3 in Article 57d inserts the provision regarding the VAT identification for the special scheme for transfers of own goods and as of when the taxable person will be allowed to start applying the scheme;
The modification in Article 57e specifies the VAT number that the Member State of identification shall use to identify the taxable person using the transfers of own goods scheme;
The additions to Article 57f identify the actions that the Member State of identification should take in case the taxable person will be excluded from the transfers of own goods scheme;
The additions to Article 57g provide details regarding the obligations of a taxable person voluntarily wanting to stop using the scheme. When it concerns the use of the transfers of own goods scheme, these rules are the same as for the Union and Non-Union schemes. However, when it concerns a deemed supplier using the IOSS scheme, the Article removes the possibility for this deemed supplier to voluntarily de-register, since the use of the IOSS is made obligatory for those traders;
The new paragraph 2a in Article 58 provides new details regarding the conditions for exclusion in the context of the transfers of own goods scheme;
The new Article 58aa specifies that the deemed suppliers cannot be excluded from the IOSS scheme since this scheme is obligatory for them;
The additions to Article 58a add references to the new transfers of own goods special scheme for the purpose of the relevant situations of cessation of taxable activities;
The additions to Article 58b cover the consequences where a mandatory IOSS user persistently fails to comply with the rules relating to that scheme;
The additions to Article 58c concern the new transfers of own goods special scheme so that in case of exclusion from this scheme, a taxable person shall fulfil its related VAT obligations directly to the Member State where the goods have been dispatched or transported to;
The additions to Articles 59 and 59a(2) detail specific rules pertaining to VAT return (periodicity and content) for the transfers of own goods scheme;
The additions to Article 60a which deal with electronic reminders, to Article 61 which deal with changes to the figures of the VAT return and to Article 61a which relate to the submission of the final VAT return and final VAT payment concern a reference to the Member State to which the goods have been dispatched or transported, which is required because in the transfers of own goods scheme there will not be a Member State of consumption, but instead there will be a Member State where the goods arrive;
The additions to the Article 63c(3) make the reporting of the VAT rate and the VAT amount subject to relevance, as under the new rule, zero rated and exempt supplies also need to be reported. The further additional data that needs to be kept by the deemed supplier in respect of the Union and non-Union schemes, concern detailed information of the suppliers that use its platform to supply goods and services, both information they have to keep and other information they need to keep only if available. Finally, record keeping obligations are introduced for taxable persons using the transfers of own goods scheme.