In an earlier MindLink article we wrote about proposals for amending the value added tax (VAT) framework. The proposals mandate e-invoicing in cross-border transactions and require changes to how EU sales lists are completed. The proposals also place responsibility for collecting VAT on platforms through which transactions are made in the accommodation and transport sector, and the one-stop shop (OSS) scheme is to be expanded.
At the ECOFIN Council meeting of 5 November 2024, the member states’ finance ministers officially approved the latest version of the proposals, postponed their effective date, and modified some of the rules. In this article we will look at the proposals again and outline the current version.
The proposals introduce digital EU sales lists populated by data from mandatory e-invoices. From 1 July 2030, preparing e-invoices and digital reports will become a requirement for registered taxable persons making intra-Community cross-border B2B supplies and acquisitions of goods. This requirement will also cover taxable supplies and acquisitions of services where accounting for VAT is the customer’s responsibility (reverse-charge VAT).
Below is a list of other noteworthy aspects:
These rules will come into force on 1 July 2030. The member states that had already adopted or announced their domestic digital real-time business reporting obligations by 1 January 2024 will have special conditions. This means they will have to bring their national systems into line with the EU model by 1 January 2035.
From 1 July 2028 an electronic intermediary platform for short-term accommodation (up to 30 nights) or passenger carriage will be considered a provider of services responsible for collecting VAT from customers unless the direct service provider:
Accommodation or passenger carriage services will be treated as supplied where they are actually performed. The member states will have to pass the rules by 1 January 2030, with a longer period of transition. Platforms will have the right to allow direct service providers themselves to collect VAT if they present a valid VAT number to the platforms.
Estonia initially voiced concerns about costs the rules will cause to small and medium enterprises and about their administrative burden. However, the new rules offer more flexibility.
Not all platforms will be subject to these rules, as exceptions will be made for platforms that merely process payments, advertise services, or simply redirect customers.
There are plans to reduce the number of cases where businesses operating in multiple member states are liable to register for VAT in multiple member states. There are plans to expand the OSS scheme from 1 July 2028 and include more types of supplies, such as domestic B2C supplies of goods in countries where the supplier is not registered for VAT. There will also be a special scheme for the cross-border movement of own goods and an obligation to apply reverse-charge VAT when the supplier is not registered for VAT in a particular country but the customer is.
Changes to the directive include some minor amendments too, such as special measures to link the IOSS (import one-stop shop) VAT number with the unique consignment number and restrict tax fraud perpetrated by abusing the IOSS. The proposals include clauses explaining how OSS returns can be adjusted, plus some other amendments.
The amendments come as a package of three proposals:
Amending the directive and regulations is subject to a special legislative procedure. Approval from the European Parliament was received on 22 November 2023. However, given the significant changes the Council has made to the proposals, the European Parliament will have to review them and give its consent. The proposals will then need to be formally passed by the Council before being published in the Official Journal of the EU and coming into force.
If you have any comments on this article please email them to lv_mindlink@pwc.com
Ask questionWe have read conflicting opinions from the State Revenue Service (SRS) on how financing from the State or EU funds affects value added tax (VAT). Persons receiving such funding should consider this issue carefully and may have to seek SRS approval for VAT treatment. To help you navigate this complexity, we will offer some guidelines based on the assessment made by the Court of Justice of the European Union (CJEU) in its ruling C‑87/23 of 4 July 2024. The case involves a dispute between the Latvian Information and Communications Technology Association (LICTA) and the SRS.
To pick up where we left off last week, in this article we look at proposals for amending the VAT Act, which include a move to direct application of 0% VAT to diplomatic and consular offices, update the conditions for registering a fiscal representative with the State Revenue Service (SRS) and ease the terms of the special VAT scheme for imports. We will also look at the margin scheme for second-hand goods and exemptions available to non-domestic taxable persons suppling goods in temporary storage.
As you may know, approval of the national medium-term tax policy guidelines, which was supposed to take place by 1 April 2024, has been delayed considerably. It’s not known for sure yet whether and how this will affect VAT treatment in future. However, the Ministry of Finance has drafted proposals for amending the VAT Act, aimed at passing the EU directive to ease the administrative burden on small and medium enterprises (SMEs) and to improve the rules for applying 0% VAT and the margin scheme for second-hand goods, works of art, antiques and collectors’ items. The amendments are to come into force on 1 January 2025. This article explores what we see as key changes.
We use cookies to make our site work well for you and so we can continually improve it. The cookies that keep the site functioning are always on. We use analytics and marketing cookies to help us understand what content is of most interest and to personalise your user experience.
It’s your choice to accept these or not. You can either click the 'I accept all’ button below or use the switches to choose and save your choices.
For detailed information on how we use cookies and other tracking technologies, please visit our cookies information page.
These cookies are necessary for the website to operate. Our website cannot function without these cookies and they can only be disabled by changing your browser preferences.
These cookies allow us to measure and report on website activity by tracking page visits, visitor locations and how visitors move around the site. The information collected does not directly identify visitors. We drop these cookies and use Adobe to help us analyse the data.
These cookies help us provide you with personalised and relevant services or advertising, and track the effectiveness of our digital marketing activities.