Background
The European Commission's ViDA proposal aims to prepare VAT rules for the digital age. It is a comprehensive package of measures that will significantly modify VAT legislation on various fronts. The legislative changes concern amendments to the EU VAT Directive (2006/112/EC), the implementing regulation (EU 282/2011), and the Council Regulation on administrative cooperation (EU 904/2010).
The main objectives of the ViDA proposal are to make the VAT system more fraud-resistant and business-friendly. To achieve these objectives, the proposal focuses on three pillars.
Firstly, the ViDA proposal aims to modernize VAT reporting by introducing new digital reporting obligations. The aim is to achieve standardized transactional e-reporting at the EU level.
Secondly, the challenges of the platform economy are addressed by updating the VAT rules and obliging platforms to collect VAT on the rental of short-term accommodation, passenger transport services, and delivery of goods in even more cases.
Finally, to prevent the need for multiple VAT registrations within the EU, the proposal seeks to work towards a single EU VAT registration. This is to be achieved, among other things, by expanding the use of existing OSS and IOSS schemes and by introducing a mandatory reverse charge mechanism for foreign suppliers and service providers.
Digital reporting requirements
Key aspects of the ViDA proposal on digital reporting include:
- E-invoicing will become the rule when issuing invoices (at least for intra-community supplies and services). From January 1, 2024, the definition of an electronic invoice will change. From then on, these must be issued in a structured format. The condition that the recipient must accept electronic invoices will be removed.
- E-invoicing under this specific protocol will be obligatory for intra-EU transactions from 2028, with no thresholds or exemptions for small businesses.
- For domestic transactions, Member States have the option to impose electronic invoicing (without prior EU approval) but must comply with the European standard set by Directive 2014/55/EU (EN16931). Other invoicing methods (electronic or paper) would be prohibited. Countries with existing deviating e-invoicing/reporting models have until January 1, 2028, to comply with the EU model.
- E-invoices must be issued within two working days after the taxable transaction is carried out. A (quasi) real-time reporting system will be introduced, replacing the existing system of intra-community sales listings and allowing Member States to exchange information more quickly. Also, taxpayers receiving intra-Community transactions will be obliged to transmit data on their purchases.
- The e-invoice must contain all the data required to be submitted to the tax administration, including current data (such as information on the quantity and nature of goods delivered, the extent and nature of services provided, the date of the goods’ delivery or completion, the taxable amount per rate, etc.). Additionally, VAT invoices will need to contain the supplier’s bank account IBAN for payment, the due date for payment, and, in the case of corrective invoices, a reference to the initial invoice number.
- Summary invoices will be abolished (invoices should, in principle, always be issued on a transactional basis).
Reply of the Minister
In response to MP Arens' concerns about potential costs for small businesses and security issues with sensitive commercial data on tax administration servers, the Minister emphasized the benefits of electronic invoicing. Many EU Member States are adopting this approach, which has improved taxpayer compliance, tax administration efficiency and effectiveness, and reduced the VAT gap.
The Minister pointed out that the obligation to issue structured electronic invoices is not new, as it exists in the context of public procurement. A study performed by the Administrative Simplification Agency reveals that transitioning to structured electronic invoices, despite initial costs, brings significant long-term benefits for businesses, such as cost savings and reduced errors due to automation.
This obligation is linked to the transition towards more efficient electronic reporting systems based on these invoices, allowing tax administrations to access more accurate and detailed information quickly. The Minister believes that both businesses and citizens will benefit from this transition and fully supports the European Commission's proposal, despite potential changes during negotiations.
Apart from ViDA and as part of efforts to reduce the VAT gap, the Minister confirmed that his administration and policy unit are preparing a draft law to mandate structured electronic invoices between taxpayers and establish a national electronic reporting system. This system will replace the existing annual customer listing.
Earlier plans in Belgium focused solely on e-invoicing in the B2B context, but the EU Commission demanded the inclusion of an e-reporting component in the approval process, which required the plans to be revised.
Draft legislation
According to the draft bills that are circulating, the following ambitious phased schedule is being considered for mandatory (B2) structured electronic invoicing:
• 1 July 2024: Large companies with a turnover of more than 9,000,000 euros (excluding VAT) in 2023.
• 1 January 2025: Companies with a turnover of more than 700,000 euros (excluding VAT) in 2023 or 2024, but no more than 9,000,000 euros (excluding VAT) in 2023.
• 1 July 2025: All other taxpayers, except those falling under the VAT exemption for small businesses and under the flat-rate scheme for farmers.
• 1 January 2028: Taxpayers for whom the VAT exemption for small businesses applies and taxpayers for whom the flat-rate scheme for farmers applies.
It is expected that taxpayers established in Belgium must be able to receive structured electronic invoices in the format in which they were issued from 1 January 2024. However, they still have the option (until 1 July 2024) to refuse these electronic invoices.
Structured electronic invoices will apply only to taxpayers established in Belgium. They can be issued by the supplier themselves, by a third party (on behalf and for the account of the supplier), or by the recipient in the context of self-billing.
Furthermore, the electronic invoice must be issued according to the PEPPOL BIS format and sent via the PEPPOL network. Deviations are allowed if both parties agree, but then the invoices must still comply with the European standard norm.
The mandatory e-reporting will only come into effect from January 1st, 2026 (six months after the obligation to issue structured electronic invoices has become effective). As previously mentioned, this system would replace the existing annual customer list. Currently, there is little further information available, but it is expected that the Belgian e-reporting measures will be in line with the ViDA proposal.
At present, discussions with stakeholders are still ongoing, so the above timing is not yet set in stone. However, what is certain is that mandatory electronic invoicing and reporting is on the horizon. Although the exact deadlines still need to be confirmed, it is essential for taxpayers to prepare and take the necessary measures in time.