Businesses and Member States expressed their concerns about the consequences of the ‘VAT in the Digital Age’ (‘ViDA’) initiative at an event organised by the European business association Business Europe on Tuesday 18 April.
The Member States are currently discussing this initiative, which was presented by the European Commission in December 2022 (see EUROPE 13080/19). It aims to modernise the value added tax (VAT) system through real-time digital reporting, updated rules for passenger transport and short-term accommodation platforms and a single VAT registration. The e-declaration is intended to introduce a new system based on electronic invoicing for businesses operating across borders in the EU.
According to an EU diplomat attending the event, the Member States welcomed the Swedish Presidency’s proposal. “The discussions are fruitful, we are moving forward”, he assured.
Discussions mainly revolve around technical details, including digital reporting requirements. There is a consensus that e-invoicing is the way forward, but it is a challenge for Member States. They have their own national reporting systems and harmonisation could change these systems, which they do not want to change. “They spent money and time to create them”, the diplomat justified.
Member States are also concerned about the implications of this initiative for business. “It is a challenge to design a system which would work for large companies as well as for small and medium-sized enterprises”, the diplomat said. “It is necessary to find the right balance”, the diplomat added.
According to a Commission official, the implementation of the digital declaration will cost businesses €11.3 billion and tax administrations €2.2 billion. But in return, the official estimated that the revenues from this tool will amount to €111 billion over the period 2023-2032 and will generate future savings of €41.1 billion.
On the SME side, it is argued that VAT is an everyday tax that should be easy to apply. “Real-time or near-real-time reporting puts extreme pressure on this”, the representative explained.
For this representative, it is important to ensure that SMEs are guided and that the system encourages voluntary compliance. This involves: - transparent local legislation; - harmonisation of the treatment of dates and places of taxation; - guidance when doubts arise in a declaration.
Finally, for large companies, the industry has called on the tax authorities to simplify the reporting requirements imposed and to make them harmonised and low-key where appropriate and possible. (Original version in French by Anne Damiani)