Annexes to COM(2022)701 - Amendment of Directive 2006/112/EC as regards VAT rules for the digital age

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dossier COM(2022)701 - Amendment of Directive 2006/112/EC as regards VAT rules for the digital age.
document COM(2022)701 EN
date December  8, 2022
Annex II, Point 20).
(6) Please include reference when available.
(7) Please include reference when available.
(8) Council conclusions on fair and effective taxation in times of recovery, on tax challenges linked to digitalisation and on tax good governance in the EU and beyond (FISC 226 ECOFIN 1097, doc. 13350/20 ).
(9) European Parliament resolution of 24 November 2016 on towards a definitive VAT system and fighting VAT fraud (2016/2033(INI)); European Parliament resolution of 4 October 2018 on fighting customs fraud and protecting EU own resources (2018/2747(RSP)).
(10) European Parliament resolution of 16 February 2022 on the implementation of the Sixth VAT Directive: what is the missing part to reduce the EU VAT gap? (2020/2263(INI)).
(11) European Parliament resolution of 10 March 2022 with recommendations to the Commission on fair and simple taxation supporting the recovery strategy (P9_TA(2022)0082).
(12) VAT reporting obligations refer to the obligation of VAT-registered businesses to make periodic declarations of their transactions to the tax authority to allow monitoring the collection of VAT.
(13) In this respect, the term ‘platform economy’ relates to supplies of services made via a platform.
(14) https://ec.europa.eu/taxation_customs/business/vat/vat-e-commerce_en
(15) There is no explicit option available for Member States to introduce mandatory e-invoicing requirements as a means of ensuring the correct collection of VAT and preventing VAT fraud. The VAT Directive makes the use of e-invoices subject to their acceptance by the recipient, in Article 232; this provision cannot be derogated via Article 273, which allows Member States to introduce other obligations on taxpayers to ensure the correct collection of VAT and to prevent VAT fraud. Hence, if a Member State wishes to introduce mandatory e-invoicing requirements, it must do so by requesting a derogation from the Directive under Article 395, which is subject to the unanimous agreement of the Council based on a proposal from the Commission.
(16) To estimate whether DRRs improved VAT compliance, thus reducing the VAT gap and increasing VAT revenues, an econometric analysis was carried out in the ‘VAT in the Digital Age’ study. The effects of DRRs are estimated on two dependent variables: the VAT gap and C-efficiency. Full details of the model specifications and the results are available in Annex 4 of the impact assessment report accompanying this proposal (Commission staff working document SWD (2022) 393).
(17) Summary of the public consultation can be found here: VAT in the digital age (europa.eu) .
(18) Different types of digital reporting requirements are currently in place in several Member States: clearance e-invoicing (Italy), real-time reporting (Hungary, Spain), SAF-T reporting (Lithuania, Poland, Portugal), VAT listing (Bulgaria, Croatia, Czechia, Estonia, Latvia, Slovak Republic) and some Member States publicly announced upcoming reporting requirements (France, Greece, Romania).
(19) Based on Eurostat estimates, there are about 210 000 multinational companies (MNCs) in the Union, 85% of which have a local headquarters and the rest being controlled by foreign entities.
(20) These mainly result from significant setup costs, especially in countries with more complex DRRs. For compliance, a small-scale MNC can be expected to invest about EUR 10 000 for SAF-T requirements, EUR 25 000 for real-time requirements and more than EUR 50 000 in case of e-invoicing. For a large scale MNC, figures reach up to EUR 50 000 for SAF-T requirements, EUR 200 000 for real-time requirements and EUR 500 000 for e-invoicing.
(21) When a business sells goods or services to a business in another Member State, it is obliged to submit a recapitulative statement to its Member State detailing the business to whom it has made the supply, and the total amount of supplies to that business. The information is shared between Member States, and is used to help ensure compliance.
(22) In 1993, with the introduction of the Internal Market, the border controls were abolished and replaced by reporting obligations of intra-Community supplies in the form of periodical recapitulative statements for VAT purposes (a recapitulative statement is a simple form submitted on a monthly/quarterly basis by traders, in addition to their VAT return, to declare goods delivered and services provided to traders in other Member States, containing the VAT number of the customers and the aggregated value of supplies per customer during a given period). These recapitulative statements are stored in national VAT databases. These databases are then connected through an electronic interface called VIES (VAT Information Exchange System), with the Commission managing the communication links between the Member States while national VIES applications are developed by the Member States. Tax administrations access VIES information for control purposes, while economic operators use a module of VIES, called the ‘VIES-on-the-web’(VoW) to check the validity of their client’s VAT number registered in the European Union for cross-border transactions on goods or services.
(23) Directive 2014/55/EU of the European Parliament and of the Council of 16 April 2014 on electronic invoicing in public procurement .
(24) ‘Platform economy’ is used to describe a multi-sided model of transactions, where there are three or more parties involved. In these transactions, an online platform facilitates the connection between two or more distinct but interdependent sets of users. In these interactions, one of the parties to the platform (providers or underlying suppliers) could offer services to the other party (consumer) in return for monetary consideration. A platform usually charges a fee for the facilitation of the transaction.
(25) According to Article 9 of the VAT Directive and its settled case-law the concept of “economic activity” has a very broad meaning. The concept of “independently” however means that employees are not treated as taxable persons.
(26) The capacity to build networks through which any additional user will enhance the experience of all existing users; an increased numbers of people or participants improve the value of a good or service.
(27) https://ipropertymanagement.com/research/airbnb-statistics
(28) VAT in the Digital Age. Final Report (vol. I – III). Specific Contract No 07 implementing Framework Contract No TAXUD/2019/CC/150.
(29) Having an ecosystem value of EUR 38.2 billion and EUR 43.2 billion per annum
(30) Table 25 of the VAT in the Digital Age Study (Part II) shows that 44% of respondents found the different application of the VAT rules by Member States to be a problem.
(31) The place of supply of an electronically supplied service to a non-taxable person is the place where the customer is established, whereas the place of supply of intermediary services to a non-taxable person is where the underlying transaction is supplied, which, in the case of services relating to immoveable property for example, would be where the property is located.
(32) Article 242a of the VAT Directive.
(33) See point 3 hereafter.
(34) Council conclusions on the implementation of the VAT e-commerce package, ST 7104/22 of 15 March 2022.
(35) 2022 Commission Work Programme, Annex II: REFIT initiatives, sub-section "An economy that works for people" (No 20).
(36) COM(2018) 329 final.
(37) Under the existing system VAT is not charged on cross-border transactions, contrary to domestic ones, allowing taxable persons to buy goods free of VAT within the single market, breaking the chain of fractioned payment and creating an incentive for fraud
(38) This system would be extended to services at a later stage.
(39) Council Directive (EU) 2025/285 on the common system of VAT as regards the special scheme for small enterprises  
(40) Member States’ recovery and resilience plans envisage a wide set of reforms aimed at improving the business environment and favouring adoption of digital and green technologies. These reforms are complemented by important efforts to digitalise tax administrations as a strategic sector of the public administration. (Annual Sustainable Growth Survey 2022 (COM(2021) 740 final)).
(41) Article 3 of Treaty on European Union (TEU).
(42) https://ec.europa.eu/info/sites/default/files/political-guidelines-next-commission_en_0.pdf.
(43) Annual Growth Survey 2021 (see page 13)    : https://ec.europa.eu/info/system/files/economy-finance/2022_european_semester_annual_sustainable_growth_survey.pdf .
(44) Member States’ recovery and resilience plans envisage a wide set of reforms aimed at improving the business environment and favouring adoption of digital and green technologies. These reforms are complemented by important efforts to digitalise tax administrations as a strategic sector of the public administration. (Annual Sustainable Growth Survey 2022 (COM(2021) 740 final)).
(45) The proposed Directive is expected to bring legal certainty on the employment status of people working through digital labour platforms, improve their working conditions (including for self-employed people subject to algorithmic management) and enhance transparency and traceability in platform work, including in cross-border situations
(46) Directive 2014/55/EU of the European Parliament and of the Council of 16 April 2014 on electronic invoicing in public procurement.
(47) Communication from the Commission to the European parliament, the Council and the European Economic and Social Committee -Taking the Customs Union to the Next Level: a Plan for Action, Brussels, 28.9.2020 ( customs-action-plan-2020_en.pdf (europa.eu) ).
(48) Commission seeks views on upcoming EU customs reform (europa.eu) .
(49) Conference on the Future of Europe – Report on the Final Outcome, May 2022, Proposal 16 (1)-(3). The Conference on the Future of Europe was held between April 2021 and May 2022. It was a unique, citizen-led exercise of deliberative democracy at the pan-European level, involving thousands of European citizens as well as political actors, social partners, civil society representatives and key stakeholders.
(50) VAT in the Digital Age. Final Report (vol. IV Consultation Activities). Specific Contract No 07 implementing Framework Contract No TAXUD/2019/CC/150.
(51) VAT in the Digital Age. Final report (vol. I – III). Specific Contract No 07 implementing Framework Contract No TAXUD/2019/CC/150.
(52) https://sdgs.un.org/goals .
(53) 2022 Commission Work Programme, Annex II: REFIT initiatives, sub-section "An economy that works for people" (No 20).
(54) 2022_annual_work_programme_-_fit_for_future_platform_en.pdf (europa.eu)
(55) Commission Implementing Decision (EU) 2017/1870 of 16 October 2017 on the publication of the reference of the European standard on electronic invoicing and the list of its syntaxes pursuant to Directive 2014/55/EU of the European Parliament and of the Council
(56) Report from the Commission to the European Parliament and the Council assessing the invoicing rules of Directive 2006/112/EC on the common system of value added tax (COM(2020)47).
(57) Council Directive (EU) 2022/542 of 5 April 2022 amending Directives 2006/112/EC and (EU) 2020/285 as regards rates of value added tax.
(58) OJ C , , p. .
(59) OJ C , , p. .
(60) Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ L 347, 11.12.2006, p. 1).
(61) The VAT Gap is the overall difference between the expected VAT revenue based on VAT legislation and ancillary regulations and the amount actually collected:
https://ec.europa.eu/taxation_customs/business/vat/vat-gap_en
(62) Europol: https://www.europol.europa.eu/crime-areas-and-statistics/crime-areas/economic-crime/mtic-missing-trader-intra-community-fraud  
(63) European Court of Auditors: 
https://www.eca.europa.eu/Lists/ECADocuments/SR15_24/SR_VAT_FRAUD_EN.pdf
(64) Directive 2014/55/EU of the European Parliament and of the Council of 16 April 2014 on electronic invoicing in public procurement (OJ L 133, 6.5.2014, p. 1).
(65) Commission Implementing Decision (EU) 2017/1870 of 16 October 2017 on the publication of the reference of the European standard on electronic invoicing and the list of its syntaxes pursuant to Directive 2014/55/EU of the European Parliament and of the Council (OJ L 266, 17.10.2017, p. 19).
(66) Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market For Digital Services and amending Directive 2000/31/EC (Digital Services Act) (OJ L 277, 27.10.2022, p. 1–102)
(67) Council Directive (EU) 2017/2455 of 5 December 2017 amending Directive 2006/112/EC and Directive 2009/132/EC as regards certain value added tax obligations for supplies of services and distance sales of goods (OJ L 348, 29.12.2017, p. 7).
(68) Council Directive (EU) 2019/1995 of 21 November 2019 amending Directive 2006/112/EC as regards provisions relating to distance sales of goods and certain domestic supplies of goods
(69) Council Directive (EU) 2022/542 of 5 April 2022 amending Directives 2006/112/EC and (EU) 2020/285 as regards rates of value added tax (OJ L 107, 6.4.2022, p. 1).
(70) Council Directive (EU) 2020/285 of 18 February 2020 amending Directive 2006/112/EC on the common system of value added tax as regards the special scheme for small enterprises and Regulation (EU) No 904/2010 as regards the administrative cooperation and exchange of information for the purpose of monitoring the correct application of the special scheme for small enterprises (OJ L 62, 2.3.2020, p. 13).
(71) Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers (OJ L 55, 28.2.2011, p. 13).
(72) Council Regulation (EU) No 904/2010 of 7 October 2010 on administrative cooperation and combating fraud in the field of value added tax (OJ L 268, 12.10.2010, p. 1).
(73) OJ C 369, 17.12.2011, p. 14.