The European Commission has just approved the proposal for a Council Directive revising the VAT
Directive in the aim of making the EU VAT system more consistent with the dynamics of the digital
The reform mainly consists of three pillars:
• The introduction of e-invoicing for all businesses with intra-Community supplies;
• A new VAT collection role for digital platforms for services relate to housing and transport;
• Extended VAT reporting obligations for e-commerce stores.
These rules will be phased in between 2025 and 2028.
The European Commission expects these measures will save EUR 1 billion in compliance expenses
for e-commerce sellers and cut EUR 11 billion of the EUR 50 billion lost due to missing trader fraud.
The shift of VAT collection liabilities to travel and accommodation platforms will bring in an extra
EUR 6.5 billion.
Single VAT number – January 2025
The successful One-Stop-Shop for distance selling will be extended to the stock movements by ecommerce sellers followed by B2C e-commerce sales (B2B2C transactions). So, sellers holding stock
in warehouses located in multiple countries (e.g., Amazon FBA, etc.) will be able to use a single VAT
number to report consumers sales within the EU.
The single VAT ID will let companies charge, declare and manage the whole EU VAT via the national
tax authorities, potentially including the auditing procedure.
The stock movement would continue to be taxable with two transactions: arrival and sale. Both of
these will be reported in the OSS, and this would require additional details to be provided to the
Member State of identification (where the OSS is registered).
This procedure will remove the necessity of hundreds of thousands of foreign VAT registrations for
e-commerce sellers. The European Commission calculates that it costs EUR 5,000 per year for
companies to deal with each foreign registration. This will cut the cost of traders by EUR 800 million
per year or EUR 8.7 billion between 2023 and 2032, according to European Commission’s estimates.
IOSS Updates – January 2025
Three important revisions have been addressed for the import one-stop shop (IOSS) which was
introduced as part of the e-commerce VAT package 2021:
• The current threshold of €150 for imported B2C sales will NOT be increased in the immediate
future. Its increase will probably be delayed until customs procedures and requirements are
• IOSS will be imposed on marketplaces to limit fraud and errors.
• As an anti-fraud tool, a link was established between IOSS numbers and shipping stocks.
VAT of the platform economy – January 2025
The EU will extend the deemed-supplier VAT obligations to platforms facilitating the supply of short term
accommodation and transport services, which currently represent more than 70% of the
platform economy when excluding goods (the so-called “Gig & sharing economy”).
Other fields of the gig & sharing economy could be covered in the future. These may include
professional and manual services, ‘click work’, crowdfunding and P2P lending. But complications
with small entrepreneurs involved in these fields will result in this being done at a later stage.
This is a very complex provision and there has been a huge resistance on behalf of digital platforms.
They believe that their business models, with several parties in the chain, were too intricate for a
simple partition of VAT liabilities. However, several “holiday countries” have pushed for the
introduction of a full VAT liability for these platforms. This is making the timeframe for both
ratification and implementation of these provisions tricky to predict.
Requirements for digital reporting – January 2028
As part of the digital reporting requirements, there are two pathways to tackle VAT fraud and
implement efficiency in the digitalisation of invoicing and reporting.
As a first step, near real-time digital reporting of transaction summary data must be established at
EU level. Secondly, mandatory intra-Community supplies (ICS), sales across EU borders, electronic
invoicing according to EN 16931 and e-invoicing should finally replace paper invoices (with limited
This shift will result in an estimated EUR 11 billion per year (EUR 111 billion over 10 years) in
additional VAT revenues. There are expected to be further gains of EUR 4 billion per year (EUR 41.4
billion over 10 years) in cost savings for businesses due to pre-compiled VAT returns, the end of
recapitulative statements and general cost savings on e-invoicing.
Mandatory B2B Intra-community digital reporting requirements (DRR) near-live transaction
reporting that will replace EC sales list summaries – January 2028
As of 2028, the intra-Community supplies (ISC) and digital acquisition reporting regime will be
implemented for all businesses, which includes those not established within the EU. These data will
be first submitted to the national tax authorities, which will on their turn integrate them into a
common EU database. Nevertheless, no technical reporting specifications for the movement of
transaction data to a common central database are confirmed yet. Most likely, member states will
enjoy some room in the implementation (but, still, under the guidelines set by Implementing
Decision (EU) 2017/1870).
A new database ‘Central VIES‘ will be monitored and managed by the European Commission and
will incorporate transactions and information on the taxpayers’ identity, as well as their VAT ID
number. There will also be some integration with the customs surveillance system and the imminent
central electronic payment information system CESOP.
The implementation of the new intra-EU reporting regime will enable the abolition of EC Sales Lists
(ESL), commonly known as recapitulative statements.
Mandatory intra-Community electronic invoicing – January 2028
All enterprises will be required to be able to send and receive e-invoices according to the European
e-invoicing standard (EN 16931) for intra-Community supplies. The format of electronic invoices will
be structured (XML; UBL; PDF/A3 etc.).
Additional details will be included in the current invoice information, including: IBAN number (or
other identifier) of the account of the supplier receiving the payment; Payment due date; and
whether there are any corrections to the invoice.
Moreover, countries are no longer required to seek EU endorsement for mandatory national einvoicing
according to the existing Article 232 of the VAT Directive. This will necessitate an
amendment to the VAT Directive, Article 218, under which electronic invoicing will be the
predefined system for issuing invoices. The usage of printed invoices will only be possible in
circumstances permitted by the Member States.
Member States can still decide on their own formats but are strongly supported to adopt the EN
16931 standard to further the long-term standardisation of EU reporting systems.