Hot on the heels of the biggest change to VAT since its inception, there are now proposals to further reform EU VAT that have recently been in consultation. The proposals have three strands:

  1. The modernisation of VAT reporting obligations and the facilitation of e-invoicing; and
  2. Updating the VAT rules for the platform economy; and
  3. Moving to a single registration in the EU and improvements to the Import One Stop Shop (“IOSS”)

Single EU VAT Registration

The One Stop Shop (“OSS) and Import One Stop Shop (“IOSS”) removed the need to have multiple VAT registrations in many instances, but there are still requirements to have VAT registrations wherever inventory is held in the EU. Certain supplies are not currently eligible. Extensions to the current schemes would provide further simplification.

Digital Invoicing

The UK has been a leader in implementing Making Tax Digital, but the EU proposals go further with consideration given to Continuous Transaction Controls (“CTC”), which is a form of transaction-based reporting based on an actual invoice or on a subset of the invoice, along with live reporting and e-invoicing.

One Stop Shop

OSS could be extended to all B2C supplies and the €150 threshold for iOSS could be removed. OSS could also be extended to B2B transactions. IOSS could be made compulsory based on thresholds.

Timeline

Proposals/draft legislation are expected to be released in Q3 2022. Any proposed changes could be as early as 2023/24, which seems unrealistic given the potential for major software development being required.