VAT in the Digital Age — Part 3: The Single VAT Registration

In addition to proposing major taxation changes related to e-invoicing and the platform economy, the European Commission’s VAT in the Digital Age (ViDA) reform package also seeks to reduce the VAT compliance burden for businesses throughout the EU. This would be accomplished via several changes to e-commerce rules and current triggers for foreign VAT registrations. These changes would take effect on 1 January 2025.

The existing European Union One-Stop Shop (OSS) scheme for B2C intra-EU supplies of goods and services would be extended to include B2C domestic supplies of goods in any EU member state where the supplier does not have a VAT identification number. Additionally, a new OSS scheme would be introduced for intra-EU movements of own stock. Plus, the Import One-Stop Shop (IOSS) scheme, for the importation of low-value consignments into the EU, would be mandatory for marketplace operators.

The existing exemption for call-off stock arrangements would end on 31 December 2025. That time frame provides a 12-month period for finalising call-off stock arrangements that were still in effect by the end of 2024. A mandatory reverse-charge mechanism also would be introduced for B2B supplies of goods and services where the supplier is not established in the country where VAT applies and the customer does have a VAT identification number in that country. Finally, the existing deemed supplier rule for marketplaces facilitating B2C supplies of goods would be extended, so that almost all supplies of goods (both B2C and B2B) facilitated by marketplaces in the EU would be covered by the extended deemed supplier rule. This includes intra-EU movements of own stock facilitated by marketplaces.

As I previously mentioned, this is a far-reaching proposal. As such, it makes sense for tax leaders in companies that do business in the EU single market to:

• Monitor the ViDA proposals as they progress and evolve.
• Keep in mind that significant VAT changes, especially regarding e-invoicing, are almost certain to occur regardless of what form they ultimately take; and
• Act sooner rather than later when it comes to getting in place the tax technology and processes needed to address VAT compliance requirements as they evolve to better address the digital economy.

Refer back to Part 1 or Part 2 of the "VAT in the Digital Age" series.