The Council of the EU and the European Commission are preparing further steps on VAT to simplify cross-border transactions and the import of goods into the EU for end consumers. The digitisation of VAT reports, electronic invoicing and harmonisation in other areas are also on the way. Amendments to the VAT Directive are expected to be published this autumn with their implementation in individual member states planned for late 2023 or early 2024.
Following the March ECOFIN Council, the Commission has prepared an extension of the One-Stop-Shop (OSS) as the preferred option to simplify the collection of VAT on cross-border supplies of goods. The Commission's proposal for an amendment to the EU VAT Directive, to be published in the autumn, includes the application of the OSS to all supplies of goods and services to end consumers and to selected supplies of goods business-to-business. Gradually, the applicability of the OSS should be extended to all cross-border business-to-business supplies of goods.
As for the imports of goods into the EU, the Council invited the Commission to analyse the impact of a possible mandatory application of the OSS regime for distance sales of imported goods (specifically the Import One-Stop-Shop, IOSS). After evaluating the current IOSS, the Commission is also to thoroughly investigate the possible cancellation of the current shipment threshold to make IOSS widely applicable, since the use of IOSS is currently voluntary and only possible for shipments up to a threshold of EUR 150.
The Commission is also seeking to harmonise the reverse charge mechanism for supplies of goods and services by businesses not established in the EU and to harmonise the appointment of an intermediary or tax representative under the various modules of the OSS.
Finally, the Council of the EU looks forward to the Commission's VAT in the Digital Age initiative, which includes e-billing, real-time electronic transaction reporting, and VAT treatment of platform economy (including the sharing economy in transport and accommodation). We will look at this initiative in more detail in the next Tax and Legal Update.
The one-stop-shop scheme will play a key role in the future not only in the electronic sale of goods to end consumers. The EU hopes that its widespread application will contribute to the development of the single market, which will also be helped by the simplification of the administrative procedure relating to multiple VAT registrations in individual member states. At the same time, gradual steps are being taken towards the long-discussed final system where VAT will be paid by the supplier in the state where the transport of goods ends, even in the case of business-to-business sales.