What changed between the draft committee report and the plenary report

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

Changed:on the draftproposal for a Council directive amending Directive 2006/112/EC as regards VAT rules for the digital age

Changed:(15159/2024(COM(2022)0701 – C100170/2024C90021/2023 – 2022/0407(CNS))

Changed:(Special legislative procedure – renewed consultation)

The European Parliament,

Removed:– having regard to the Council draft (15159/2024),

– having regard to the Commission proposal to the Council (COM(2022)0701),

Removed:– having regard to its position of 22 November 2023,

Added:– having regard to Article 113 of the Treaty on the Functioning of the European Union, pursuant to which the Council consulted Parliament (C90021/2023),

Removed:– having regard to Article 113 of the Treaty on the Functioning of the European Union, pursuant to which the Council consulted Parliament again (C100170/2024),

Added:– having regard to Rule 82 of its Rules of Procedure,

Changed:– having regard to Rulethe 84report andof 86the ofCommittee itson RulesEconomic ofand Procedure,Monetary Affairs (A9-0327/2023),

Change 1

Removed:– having regard to the report of the Committee on Economic and Monetary Affairs (A100000/2024),

Added:1. Approves the Commission proposal as amended;

Removed:1. Approves the Council draft;

Added:2. Calls on the Commission to alter its proposal accordingly, in accordance with Article 293(2) of the Treaty on the Functioning of the European Union;

3. Calls on the Council to notify Parliament if it intends to depart from the text approved by Parliament;

Change 2

Changed:3.4. Asks the Council to consult Parliament again if it intends to substantially amend itsthe draftCommission substantially;proposal;

5. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Change 3

Added:Recital 1 a (new): (1a) The package ‘VAT in the Digital Age’, of which this Directive forms a part, aims to respect the principle of proportionality as regards, on the one hand, the objective of combating fraud and, on the other hand, the difficulties that might arise in the application of the proposed rules for companies, especially for SMEs and micro-undertakings, in terms of the day-to-day running of businesses, and also for national authorities. The new VAT obligations resulting from the reform should be simple, clear, effective and balanced for all parties involved in order to work in practice for businesses and administrative authorities.

Added:Recital 1 b (new): (1b) The package ‘VAT in the Digital Age’ aims to ensure full respect of the fundamental rights to privacy and personal data protection, as well as the applicability of Regulations (EU) 2016/6791a and (EU) 2018/17251b of the European Parliament and of the Council to the processing of personal data. The information collected should only be able to be processed for the purpose of combating fraud by the competent tax authorities. / 1a Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1). / 1b Regulation (EU) 2018/1725 of the European Parliament and of the Council of 23 October 2018 on the protection of natural persons with regard to the processing of personal data by the Union institutions, bodies, offices and agencies and on the free movement of such data, and repealing Regulation (EC) No 45/2001 and Decision No 1247/2002/EC (OJ L 295, 21.11.2018, p. 39).

Added:Recital 1 c (new): (1c) The Commission should ensure that taxpayers’ rights are respected given the fact that tax authorities will have access to vast amounts of data, including from algorithmic data analysis systems. The use of new technologies should respect Union values, human rights and primary law.

Added:Recital 1 d (new): (1d) The collection of individuals' personal data should not under any circumstances infringe the right to privacy of individuals. Otherwise, it would be considered to be equivalent to unlawful surveillance. Information contained in invoices might reveal sensitive information concerning specific natural persons, such as information concerning purchased goods (including intimate products), travel arrangements or legal services.

Added:Recital 2: (2) The VAT reporting obligations should be adapted to address the challenges of the platform economy, to reduce the need for multiple VAT registrations in the Union and to significantly reduce compliance costs for taxpayers, namely SMEs, in order to ensure a level playing field and the proper functioning of the internal market.

Added:Recital 3: (3) VAT revenue loss, known as the ‘VAT Gap’, was in 2020 estimated at EUR 93 billion61 in the Union, a significant part of which consists of fraud, in particular missing trader intra-Community fraud62 , estimated in the range of EUR 40-60 billion63 The current VAT gap demonstrates the need to tackle VAT cross-border fraud and carousel fraud through the proper implementation of efficient exchange of information mechanisms and of adequate means for such exchange, including human, financial, technical and technological means. Moreover, the magnitude of the VAT gap value differs significantly from one Member State to another and it is therefore important to enhance cooperation and coordination at the Union level.

Added:Recital 3 a (new): (3a) The VAT gap feeds the lack of trust between Union tax authorities and represents much more than just missing trader intra-Community (MTIC) fraud. The best way to fight against MTIC, including carousel fraud, would be to remove the VAT exemption for intra-Community supplies of goods and services, since that type of fraud is for the most part due to a break in the fractioned collection of VAT. In order to better circumscribe the fight against VAT fraud, the Commission should undertake further analysis as to how the implementation of this Directive could lay the groundwork for the removal of the VAT exemption for intra-Community supplies of goods and services (i.e. the ‘definitive VAT system’).

Added:Recital 3 b (new): (3b) The collection of data for international trade statistics (Intrastat) in the context of intra-Community transactions is an essential tool for the tax administrations of the Member States in the fight against VAT fraud and should be maintained.

Added:Recital 3 c (new): (3c) The VAT exemption for intra-Community supplies of goods and services could increase the possibility of fraud, especially at retail level.

Added:Recital 4: (4) In order to increase tax collection on cross-border transactions and to end the existing fragmentation stemming from Member States’ implementation of divergent reporting systems, resulting in a significant burden on businesses and ineffective cross-border controls, rules should be laid down for Union digital reporting requirements. Such rules should provide information to tax administrations on a transaction-by-transaction basis, in order to allow cross matching of data, increase the control capabilities of tax administrations and create a deterrent effect on non-compliance, while reducing compliance costs for businesses operating in different Member States and eliminating barriers within the internal market.

Added:Recital 4 a (new): (4a) VAT fraud is often linked with organised crime and a very small number of those organised networks can be responsible for cross-border VAT fraud amounting to billions of euro, affecting not only revenue collection in Member States but also having a negative impact on the Union’s own resources. Therefore, Member States have a shared responsibility for the protection of the VAT revenue of all Member States.

Added:Recital 4 b (new): (4b) The Commission will ensure that digital reporting requirements take into account the experience gained in certain Member States which have already invested in digital invoicing and reporting, so that existing investments in those Member States are not lost and all stakeholders can benefit.

Added:Recital 4 c (new): (4c) Digital reporting requirements that aim to provide information to tax authorities on a transaction-by-transaction basis should be fair, achievable and balanced, in accordance with the principle of proportionality. The reliability of technological solutions for detecting fraud should result in increased legal certainty for taxpayers.

Added:Recital 5: (5) To facilitate the automation of the reporting process for both taxable persons and tax administrations, the transactions to be reported to tax administrations should be documented electronically. The use of electronic invoicing could become the default system for issuing invoices. Nevertheless, Member States should be allowed to authorise other means for domestic supplies. The issuance of electronic invoices by the supplier and its transmission to the customer should not be conditional on a prior authorisation or verification by the tax administration as of 1 January 2028.

Added:Recital 6: (6) At the end of the transitional period, the definition of an electronic invoice should be aligned with that used in Directive 2014/55/EU of the European Parliament and the Council64, to achieve standardisation in the area of VAT reporting. However, businesses, in particular micro-undertakings and small undertakings as defined in Directive 2013/34/EU64a and non-profit entities, should remain free to adopt other standards in line with Article 217 of Directive 2006/112/EC. / 64a Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).

Added:Recital 6 a (new): (6a) In order to help businesses and tax administrations, the content of the European electronic invoicing standard should be made accessible, simple and clear, in particular by publishing on the Commission's website all relevant information relating to that standard. Given the fact that the European electronic invoicing standard referred to in Directive 2014/55/EU is adapted to a ‘business to government’ (B2G) context, its evolution should be planned to take into account ‘business to business’ (B2B) needs.

Added:Recital 7: (7) For the VAT reporting system to be implemented in an efficient manner, it is necessary that the information reaches the tax administration without delay. Therefore, the deadline for the issuance of an invoice for cross-border transactions should be set at 8 working days after the chargeable event has taken place. The limitation periods for the prosecution of VAT fraud should be adjusted accordingly.

Added:Recital 9: (9) The implementation of the electronic invoice as the default method for documenting transactions for VAT purposes would not be possible if the use of the electronic invoice remains subject to the acceptance by the recipient. Therefore, the acceptance by the recipient should no longer be required as of 1 January 2028.

Added:Recital 10 a (new): (10a) Summary invoices save time and costs and reduce the administrative burden related to invoicing. Moreover, they reduce the possibility of errors and simplify the work for suppliers and customers thanks to simplified record keeping. However, they could also be misused for fraud. Therefore, summary invoices should be maintained only for business to business transactions and should only cover a limited period of time.

Added:Recital 12: (12) The growing flow of information exchanged daily requires high-performance computer software capable of transmitting the information continuously to national administrations in a secure manner. In order to facilitate for taxable persons the transmission of the invoice data, Member States should put at the disposal of the taxable persons, and in particular of micro-undertakings and small undertakings as defined in Directive 2013/34/EU and non-profit entities, the necessary means for such transmission, which should allow that the data is sent by the taxable person directly or by a third party on that taxable person’s behalf.

Added:Recital 13: (13) Whilst the information to be transmitted through the digital reporting requirements for intra-Community transactions should be similar to what was transmitted through the recapitulative statements, it is necessary to request taxable persons to provide additional data, including bank details and payment amounts, so that tax administrations can follow not only the goods but also the financial flows and can obtain appropriate information on those flows.

Added:Recital 14: (14) Placing an unnecessary administrative burden on taxable persons operating in different Member States should be avoided. Therefore, such taxable persons should be able to provide the necessary information to their tax administrations using the European standard laid down in Commission Implementing Decision (EU) 2017/187065 , which fulfils the request laid down in Article 3(1) of Directive 2014/55/EU to create an European standard for the semantic data model of the core elements of an electronic invoice. Member States should be allowed to provide for other methods to report the data that could be easier for certain taxable persons to comply with and that could lead to a reduction of unnecessary burdens.

Added:Recital 15: (15) In order to achieve the necessary harmonisation in the reporting of data on intra-Community transactions, the information to be reported should be the same in all Member States, without the possibility for Member States to request additional data. The collection of that data should make it possible to have better statistics as to the extent of VAT fraud and should make it possible to reduce that fraud.

Added:Recital 16 a (new): (16a) Digitalisation makes companies increasingly vulnerable to cybercrime and hacker attacks. The Commission and the Member States should each ensure, as far as possible, the protection of data against cyber-attacks and attacks by hackers or zappers, during their transmission, on a transaction by transaction basis, and during their storage by tax authorities.

Added:Recital 16 b (new): (16b) The rules governing electronic invoicing and digital reporting requirements do not apply to defence-related purchases exempted under Articles 143 and 151 of Directive 2006/112/EC.

Added:Recital 16 c (new): (16c) In order to ensure the security of the data transmitted, an exhaustive list of the authorities authorised to examine the data should be drawn up, together with a procedure for processing the data. EPPO, OLAF and Europol should be on that list.

Added:Recital 17: (17) Several Member States have put in place, in accordance with Article 273 of Directive 2006/112/EC, divergent reporting requirements for transactions within their territories. Those divergent reporting requirements prejudice the functioning of the internal market. In order to avoid the costs derived from the fragmentation of the regulatory framework, the systems implemented in Member States to report supplies of goods and services for consideration between taxable persons within their territory could have the same features of the system implemented for intra-Community transactions. Member States should provide for the electronic means for the transmission of the information and, as is the case for intra-Community transactions, it should be possible for the taxable person to submit the data in accordance with the European standard laid down in Implementing Decision (EU) 2017/1870, unless the relevant Member State could provide for other, equally effective, means to transmit the data. The data should be allowed to be sent by the taxable person directly or by a third party on that person’s behalf.

Added:Recital 18: (18) Member States should not be obliged to implement a digital reporting requirement for supplies of goods and services for consideration between taxable persons within their territory. At the end of the transitional period, Member States will still be able to introduce other standards, even though they have to accept electronic invoices based on the European Standard.

Added:Recital 18 a (new): (18a) The collection of individuals’ personal data should not under any circumstances infringe their right to privacy.

Added:Recital 19: (19) In order to evaluate the effectiveness of the intra-Community digital reporting requirements, the Commission should prepare an assessment report evaluating the impact of intra-Community digital reporting requirements on the reduction of the VAT gap and in the implementation and compliance costs for taxable persons and tax administrations, in order to verify whether the system has achieved its objectives or needs further adjustments or any extension to domestic transactions. In addition, the Commission should commission an independent study containing a comprehensive analysis on missing trader fraud, which is a particular category of VAT fraud, and in particular on the effectiveness of the digital reporting requirements in fighting such fraud. The Commission should also command an independent study to conduct a thorough assessment of the advantages and disadvantages of making import one-stop shop (IOSS) mandatory.

Added:Recital 20: (20) Member States should be able to continue to implement other measures to ensure the correct collection of VAT and to prevent evasion.

Added:Recital 20 a (new): (20a) In order to reduce the legal risk to which businesses, especially SMEs and micro-undertakings, are exposed due to the complexity of VAT rates within the Union, the databases of the Commission could be expanded into an up-to-date tool that is easily accessible for businesses, providing near real time information on Union VAT rates and responses to tax inquiries.

Added:Recital 22: (22) There are risks of distortion of competition between supplies performed through online platforms that escape VAT taxation, and supplies performed in the traditional economy that are subject to VAT.

Added:Recital 23: (23) It is therefore necessary to lay down clear, balanced and proportionate rules to address potential distortions of competition in the short-term accommodation rental and passenger transport sectors through the introduction of the deemed supplier model. Under this model, platforms are required to charge and account for the VAT on the underlying supply where no VAT is charged by the supplier, and can be subject to reporting obligations. While the principle of VAT neutrality is key to the VAT system, and should be adhered to as much as possible, the characteristics of the short-term accommodation rental and passenger transport sectors require a dedicated approach through the deemed supplier model.

Added:Recital 23 a (new): (23a) As the establishment of a deemed supplier model will entail additional costs for small platforms, incentives should be provided to encourage them to comply as soon as possible in order to guarantee a level playing field and conditions for fair competition in those markets.

Added:Recital 23 b (new): (23b) The deemed supplier scheme should not apply to platforms which are small and medium-sized undertakings as defined in Directive 2013/34/EU, e.g. small suppliers of Short Term Rental (STR) accommodation (hosts or VAT-exempt businesses) that contribute to sustainable tourism in the Union and promote travel to less frequented places. In addition, the deemed supplier scheme should ensure a level playing field and not provide a competitive advantage to large platforms, which are better able to bear additional costs.

Added:Recital 24: (24) Member States interpret the place of supply of the facilitation service provided by the platforms to non-taxable persons differently. It is necessary to clarify this rule so that the use of a facilitation platform does not in any way create a competitive advantage for a provider. It is also necessary, for the sake of clarity and legal certainty, to establish a uniform definition of the term ‘platform intermediary’.

Added:Recital 31 a (new): (31a) The implementation of various Union one-stop shop (UOSS) regimes in the Member States requires providing companies with sufficient technical specifications to ensure that the one-stop shop (OSS) declarations do not differ from one country to another and also giving companies the option of downloading a file to submit an OSS declaration.

Added:Recital 31 b (new): (31b) In order to simplify the day-to-day running of businesses, the Commission might consider consolidating the current three registrations, i.e., import one-stop shop (IOSS), Union one-stop-shop (UOSS) and non-Union one-stop shop (non-UOSS), so that all supplies (namely, imported goods, services and domestic sales) can be declared through a single portal.

Added:Recital 32: (32) Amongst other measures, Directive (EU) 2017/2455 extended the scope of the Mini OSS to become a broader OSS, covering all cross-border supplies of services to non-taxable persons taking place in the Union and all intra-Community distance sales of goods. Exceptionally, electronic interfaces, such as marketplaces and platforms, which become deemed suppliers for certain supplies of goods within the Union can also declare certain domestic supplies of goods in the Union OSS scheme. To support the objective of a single VAT registration in the Union, the scope of the Union OSS scheme should be further expanded to cover other supplies of goods, including domestic business-to-consumer supplies of goods in the Union by taxable persons who are not identified for VAT purposes in the Member State of consumption, ensuring that businesses do not need to register for VAT in each Member State where such supplies of goods to consumers take place. In addition, the scope of the Union OSS scheme should be expanded to also include domestic supplies of margin scheme goods to any person, when those goods are supplied by a taxable person (taxable dealer) who is not identified in the Member State were such supplies of goods take place. This amendment would allow taxable dealers to benefit from the OSS simplifications, and allow for the VAT due on those supplies to be declared and paid in one Member State of identification via the enlarged Union OSS scheme. However, any extension of the Union OSS …

Added:Recital 33: (33) VAT is normally charged and accounted for by the supplier of the goods or services. However, in certain circumstances Member States may provide that, under the reverse charge mechanism, the recipient of the supply, rather than the supplier, is obliged to account for the VAT due. To further support the objective of a single VAT registration in the Union, rules should be laid down for the mandatory application by Member States of the reverse charge mechanism in situations where a supplier is not established for VAT purposes in the Member State in which VAT is due. For control purposes, such supplies should be reported in the recapitulative statement.