VAT reform in the EU : VIDA approval delayed

The vote of the ECOFIN on the European VAT reform was expected on Tuesday 14/05.

Blocked by one of the member states, the reform will need a new agreement.

The updated version of the reform was published by the European Council on May 8. It contained slight modifications on initial proposals of the Commission and the updated timetable for their implementation:

Measures applicable from 01/01/2026

• Extension of the VAT liability of digital platforms on all distance sales facilitated within the EU for non-European sellers, regardless of the place of establishment or residence of the customer;
• Clarified calculation of the Europe-wide annual threshold of €10K for distance sales, with exclusion of domestic sales and local sales from stocks located in another member state;
• Clarification of the VAT recovery mechanism for suppliers registered under distance sales schemes;
• Possibility for member states to introduce cash accounting scheme for VAT liability on certain transactions, with the corresponding shift of VAT deduction rights of customers;
• Strengthening controls of IOSS numbers through their link with the unique consignment number.

Measures applicable from 01/07/2027

A. Digital platforms

• VAT liability of digital platforms facilitating the distance sales of short-term accommodation services and road passenger transport services provided by non-liable sellers or sellers under SME scheme (optional measure for Member States, under special conditions) ;
• Introducing mandatory registers for the above facilitated sales which are not presumed to be provided by digital platform (10-years retention obligation);
• Definition of short-term accommodation services comparable with hotel services, provided uninterruptedly to the same person for a period not exceeding 30 days (subject to variations in the local legislation of member states);
• Exclusion of TOMS operators from the presumption of deemed suppliers.

Mandatory local reverse charge for B2B supplies of non-established suppliers

• Generalisation of the reverse charge mechanism for all local sales made by non-established suppliers towards customers which are VAT registered in the country of supply;
• Possibility for member states to extend this rule to all customers regardless of their status, except for margin regime.

Extension of the OSS scheme

• OSS extension on exempt sales (with maintenance of VAT deduction rights) and on zero rated ales;
• OSS extension on local distance sales of non-established sellers;
• OSS extension on transfer of own stocks within the EU;
• Consecutive removal of simplification measures for call-off stocks.

Measures applicable from 01/07/2028

• Termination of simplified withdrawals from call-off stocks put in place before July 2027.

Measures applicable from 01/07/2030

• European standards for mandatory electronic invoicing for cross-border transactions with a maximum issuance time of 10 days after the taxable event;
• Mandatory electronic reporting, within 5 days, for cross-border transactions;
• Removal of the obligation of EC sales lists filing;
• Possibility for member states to maintain their own e-invoicing and e-reporting for local transactions, with their adjustment to the European standards before 2035;
• Possibility for member states to maintain specific reporting obligations, such as SAF-T;
• Possibility for member states to limit the local VAT deduction to transactions invoiced electronically;
• Optional acceptance of the electronic invoices by customers established in the country of supplier;
• Possibility for member states to allow the issuance of summary invoices, within 10 days after the end of the month of transactions;
• Introduction of new mandatory invoicing mentions, such as Reverse charge and triangular transactions.

Tax consequences

These measures mainly aim to reduce VAT fraud within the EU and administrative burdens for companies carrying out cross-border operations.

Ultimately, companies will be able to have a single European VAT number allowing them to carry out all their declarations in the single EU member state of their VAT registration.

Until the reform’s approval, certain measures and dates of their implementation may be subject to further modifications.

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