VAT in the Digital Age

BDO Ireland
Insights
2023
VAT in the Digital Age

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

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.

house-in-focus

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.

single-registration

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.

Content adapted from Finance Dublin's The Irish Tax Monitor.