Philip Nolan – VAT Partner, BDO: In late 2022 the European Commission launched its long-awaited proposals to modernise the VAT rules within the EU collectively known as “VAT in the Digital Age package” (“ViDA”).
The ViDA consists of three key parts, which are very briefly summarised below:
• Digital reporting and E-invoicing
• the introduction of e-invoicing and a two working day digital reporting requirement for all intra-community business supplies on a transaction by transaction basis. Originally proposed to be effective from 1 January 2028.
• The Platform economy
• the introduction of a “deemed supplier” for VAT purposes for certain platforms in the short-term accommodation rental and passenger transport sectors. Originally proposed to be effective from 1 January 2025.
• The Single VAT registration
• the extension of the reverse charge rule for intra-community business supplies and the One Stop Shop for certain supplies to private consumers together with the introduction of new rules for the transfer of own goods. Originally proposed to be effective from 1 January 2025.

The proposed rules are extensive and complex highlighted by the fact that in July 2023, the European Parliament, as part of the ViDA consultation process, has suggested around 300 amendments are made to the draft legislation and suggested delaying implementation by two years.

We should have more clarity on the position and the proposed implementation timelines by the end of 2023 but to note change is coming and it is now more of question of “When” and not “If”. With this in mind, affected businesses should use the likely extension to familiarise themselves with the proposals so they can assess the likely impact on their business. In particular, on the digital reporting and e-invoicing side, the new requirements will put an additional burden on businesses who need to review the extent to which existing systems will be able to cope with the new e-invoicing (both issuing and receiving e-invoices), and digital reporting requirements under the proposals.

Lorraine Morrison, Senior Tax Manager, Indirect Tax, Deloitte Ireland LLP: The VAT in the Digital Age (ViDA) proposal is an extensive set of measures aimed at modernising and digitalising the EU’s VAT system, while ultimately also making it more robust to fraud.
The proposed reforms can be broken down into three particular areas as follows:
E-invoicing and digital reporting requirements (DRR): introduction of mandatory e-invoicing and DRRs for certain intra-EU supplies of goods and services, with near real time transactional data transmission to tax authorities;
VAT rules for the platform economy: extension of current deemed supplier rules for platforms, as well as the introduction of deemed supplier rules for platforms facilitating short-term accommodation and passenger transport services;
Single VAT registration: new and extended options for businesses selling to consumers across the EU to report transactions in a single VAT registration through expansion of the use of the One-Stop-Shop (OSS) and Import-One-Stop-Shop (IOSS) schemes.

While there are particular subsets of the proposals aimed at specific industries and operators, it is important to note that these proposed reforms are far-reaching and will impact on all businesses in the coming years.

At this juncture, businesses should become familiar with the ViDA proposals and assess how they impact your business. It will be vital to prepare a high-level plan for readiness together with the relevant internal stakeholders and engage with your advisors where support is needed. Many businesses have been adapting, and continue to adapt, to an ever-expanding digital reporting landscape and while these proposals should reduce the current fragmented approached across the EU, a level of Member State discretion will remain for implementation of the rules. Businesses should ensure they remain up to date as the ViDA proposals progress and Member States move to implementation, allowing for timely and accurate development and upgrading of IT systems, as well as training for personnel to address these upcoming changes.

This article appeared in the October 2023 edition of the Irish Tax Monitor.