William Bain
Head of Trade Policy, British Chambers of Commerce
The EU is planning is first major changes to VAT laws since the UK left the common VAT area as part of the Brexit process.
The new proposals are part of the EU’s VAT in the Digital Age (ViDA) policy reforms, which prepare European companies for the further expansion of e-commerce and trade digitalisation.
This will have a reach across effect upon UK companies – some of these will be welcome, but others will prove more challenging. It should also be remembered that Northern Ireland (NI) continues to apply EU VAT law on traded goods but not services, and these reforms will have relevance to NI in terms of its trading relationship with the EU.
The legislation is due to be adopted in 2024.
Digital Invoicing
In 2030, under new Digital Reporting Requirements (DRR), e-invoicing will be the mandatory means of invoicing for intra-EU supplies or goods and services. It will be up to EU states whether they still accept VAT invoices from Great Britain (GB) in paper formats.
Some of the reforms will simplify compliance – for example, registering in one EU state for VAT will be all that is required for a British company rather than having to file in multiple EU states. But this could be delayed from 2025 until 2026.
The ‘deemed supplier’ principle will also be extended, potentially from 2026, into new sectors such as transport and hospitality accommodation – enabled by online platforms. They will assume liability to levy VAT if the individual suppliers have not.
In 2030, under new Digital Reporting Requirements (DRR), e-invoicing will be the mandatory means of invoicing for intra-EU supplies or goods and services.
Import One Stop Shop
A major change is the incoming mandatory requirement upon platforms to use the import One Stop Shop (I-OSS) for goods being exported to EU customers. A broader obligation for non-platform transactions as well, means all goods from outside the Union will have to be supplied using I-OSS – the current rules apply only to goods under €150.
UK exporters of services via remote means into the EU will be brought within the scope of VAT rules and will have to account for the VAT due on the supply of services. EU laws will continue to affect exporting firms in the UK, selling goods and services into their largest export market. Getting the right advice on compliance, with updates in EU VAT law, remains as important as it ever did.