Brussels, 28/01/2009 (Agence Europe) - As we announced (see EUROPE 9826), the European Commission, on Wednesday 28 January, adopted a proposal to amend directive 2006/112/EC - better known as the VAT Directive - to increase the use of electronic invoicing, support small and medium-sized enterprises (SMEs) and help member states combat VAT fraud. The proposal simplifies, modernises and harmonises VAT invoicing rules. In particular, it gets rid of current barriers to e-invoicing in the VAT Directive by treating paper and electronic invoices equally. It thus provides a technologically neutral solution, by removing such technological options as advanced electronic signatures and electronic data interchange (EDI), which member states can currently demand in their own countries. The proposal, which closely follows the recommendations of the expert group on reducing the administrative burden, is expected to bring reductions in costs of up to €18 billion per year in the medium term, according to Taxation and Customs Union Commissioner László Kovács. It is, however, only a first step, with the Commission saying that it is crucial that member states agree on a platform of common principles that will allow companies to adopt electronic invoicing solutions. Furthermore, in implementing the approach that seeks to reduce the administrative burden borne by business by 25%, the proposal raises other points linked to billing. It will put in place two types of VAT invoice, the “full” invoice and the “simplified” invoice, differentiated one from the other by the likelihood of the right to VAT reduction and by the checks required both of the supplier and of the customer. The Commission is proposing simplification measures for transactions, the value of which does not exceed €200 or involve a customer not liable for VAT (“B2C” relations). A harmonised six-month period for compulsory storage of invoices would also be introduced. The aim of the measures is to help combat tax fraud: companies will have to declare cross-border operations within one month of delivery. (E.H./M.B./transl.rt)