ViDA: E-invoicing and digital reporting
ViDA: E-invoicing and digital reporting
In order to increase the tax collection on cross-border transactions and to end the fragmentation resulting from EU Member States adopting their own digital reporting systems, pillar I of the ViDA proposal sets out to introduce an EU digital reporting requirement on a transaction-by-transaction basis. This allows the tax administrations to cross-check data. It is also hoped that the new rules will create a deterrent effect on non-compliance. Businesses operating in different EU Member States will not be confronted with divergent regimes in the future.
The proposed rules include e-invoicing, a mandatory digital reporting for intra-EU transactions and an optional digital reporting for domestic supplies.
E-invoices must comply with the European standard laid down in Commission Implementing Decision 2017/1870 on electronic invociing and the list of its syntaxes pursuant to Directive 2014/55/EU (on electronic invoicing in public procurement). For domestic supplies EU Member States may allow different formats. The standard format is a structured electronic format which allows for automated and electronic processing. Hybrid invoices combining data embedded in a structured format and data embedded in an unstructured human-readable format are allowed. These e-invoices are not subject to acceptance by the recipient in case of transactions subject to the cross border digital reporting (see below).
The deadline of issuing an invoice is set at 10 days following the chargeable event. In case of payment on account it is ten days following the receipt of the payment. In the original proposal the deadline was much shorter covering 2 working days.
Different than under the original proposal the possibility to issue summary invoices is not abolished. It is allowed to issue summary invoices which should over supplies chargeable during the same calendar month. The invoice should be issued within 10 days following the end of that calendar month. Member States have the option to exclude summary invoices in fraud sensitive sectors. In case batches containing several e-invoices are sent or made available to the same recipient, the details common to all the individual invoices may be mentioned only once if for each invoice all information is accessible.
In addition to the already existing invoice requirements there are two new requirements. Invoices should contain:
In principle both supplier and customer must report a transaction. A customer must report the data on the transaction no later than 5 days after the invoice is received. It is however possible that the measures adopted by the Member State in relation to invoices and reporting provides enough guarantees that the supplier will provide the data to the tax administration whenever an invoice is issued. If that is the case Member States can waive the obligation of digital reporting for the recipient, but should notify the Commission of this (which will inform the other EU Member States).
The data should be submitted to the Member State which issued the VAT identification number used for the transaction. The data can be transmitted by the taxable person himself or by a third party. Member States must provide for the electronic means of submitting data. Which data must be transmitted depends on the type of transaction that is being reported. The data to be transmitted is data that is included in the e-invoice. The data collected by the Member States will be subsequently transmitted to a central electronic VAT information exchange system (central VIES) within one day. Here the data is stored for ten years. In central VIES the data is stored, automatically cross-checked and aggregated. The data in central VIES can only be used to monitor the correct application of VAT and combat VAT fraud. It will be linked to the Transaction Network Analysis system, the central electronic system of payment information (CESOP) and national electronic systems.
A correct providing of the data under the digital reporting scheme is a substantive requirement for applying the exemption (zero rate) for intra-Community supplies as is currently the case with the recapitulative statement.
Member States may allow for the transmission of data from electronic invoices using other data formats as long as those ensure interoperability with the European standard on electronic invoicing.
The proposed rules include e-invoicing, a mandatory digital reporting for intra-EU transactions and an optional digital reporting for domestic supplies.
E-invoicing
The obligation to issue e-invoices covers only the transactions subject to digital reporting on cross-border transactions (see below). EU Member States may accept other documents, including paper invoices, for supplies not covered by the digital reporting of cross-border transactions.E-invoices must comply with the European standard laid down in Commission Implementing Decision 2017/1870 on electronic invociing and the list of its syntaxes pursuant to Directive 2014/55/EU (on electronic invoicing in public procurement). For domestic supplies EU Member States may allow different formats. The standard format is a structured electronic format which allows for automated and electronic processing. Hybrid invoices combining data embedded in a structured format and data embedded in an unstructured human-readable format are allowed. These e-invoices are not subject to acceptance by the recipient in case of transactions subject to the cross border digital reporting (see below).
The deadline of issuing an invoice is set at 10 days following the chargeable event. In case of payment on account it is ten days following the receipt of the payment. In the original proposal the deadline was much shorter covering 2 working days.
Different than under the original proposal the possibility to issue summary invoices is not abolished. It is allowed to issue summary invoices which should over supplies chargeable during the same calendar month. The invoice should be issued within 10 days following the end of that calendar month. Member States have the option to exclude summary invoices in fraud sensitive sectors. In case batches containing several e-invoices are sent or made available to the same recipient, the details common to all the individual invoices may be mentioned only once if for each invoice all information is accessible.
In addition to the already existing invoice requirements there are two new requirements. Invoices should contain:
- In case of corrective invoices the sequential number which identifies the corrected invoice.
- The bank account number or virtual account of the supplier into which the recipients can pay that invoice (this may include multiple accounts).
Holding an e-invoice issued in compliance with the standard mentioned can be made a substantive condition by EU Member States to be entitled to deduct or reclaim VAT.
The proposed rules enter into force as of 1 July 2030. Already as of the entry into force of the Directive EU Member States may impose the obligation on taxable persons established in their territory to issue electronic invoices for supplies of goods and services not covered by the cross-border digital reporting (see below). An EU Member State that has exercised this option may also provide that the use of electronic invoices is not subject to the acceptance of the recipient established in their territory.
Digital reporting on cross-border transactions
Mandatory digital reporting applies on cross-border transactions which cover:- Intra-community supplies
- Transfer of own goods (unless the special scheme is used)
- Services on which the VAT is reverse charged (unless the service is exempted)
In principle both supplier and customer must report a transaction. A customer must report the data on the transaction no later than 5 days after the invoice is received. It is however possible that the measures adopted by the Member State in relation to invoices and reporting provides enough guarantees that the supplier will provide the data to the tax administration whenever an invoice is issued. If that is the case Member States can waive the obligation of digital reporting for the recipient, but should notify the Commission of this (which will inform the other EU Member States).
The data should be submitted to the Member State which issued the VAT identification number used for the transaction. The data can be transmitted by the taxable person himself or by a third party. Member States must provide for the electronic means of submitting data. Which data must be transmitted depends on the type of transaction that is being reported. The data to be transmitted is data that is included in the e-invoice. The data collected by the Member States will be subsequently transmitted to a central electronic VAT information exchange system (central VIES) within one day. Here the data is stored for ten years. In central VIES the data is stored, automatically cross-checked and aggregated. The data in central VIES can only be used to monitor the correct application of VAT and combat VAT fraud. It will be linked to the Transaction Network Analysis system, the central electronic system of payment information (CESOP) and national electronic systems.
A correct providing of the data under the digital reporting scheme is a substantive requirement for applying the exemption (zero rate) for intra-Community supplies as is currently the case with the recapitulative statement.
Domestic digital reporting
EU Member States are not required to implement digital reporting for domestic transactions. However, if they choose to implement this, they should do so in conformity with the cross-border digital reporting scheme. Member States that already have such a system in place should adapt it to the system for cross-border transactions. They have until 2035 to take care of this. This applies to Member States having a system in place on 1 January 2024 or having been granted an authorization for such a system before or on that date.Member States may allow for the transmission of data from electronic invoices using other data formats as long as those ensure interoperability with the European standard on electronic invoicing.
Recapitulative statements and other obligations
The obligation to issue recapitulative statements will be removed as it will be replaced with the digital reporting system for cross border transactions. EU Member States are also not allowed to impose additional general transaction-based reporting obligations for transactions that are covered by the digital reporting requirements, unless this is required at a national level to prepare and submit a VAT return for audit purposes. SAF-T obligations and cash registers can be maintained. Member States are also not limited in their possibilities to request information from taxable persons at the occasion of audits.
BDO’s observations
The European Commission has made a choice for e-invoicing and near real time reporting of intra-Community supplies, while harmonizing the rules for EU Member States that want to apply a similar system for domestic supplies. From a business perspective harmonization is to be welcomed, because of the current fragmentation of rules. Still the reporting requirements will put an additional burden on businesses. The extension of the time to issue e-invoices - within ten days instead of two working days - and the possibility to issue summary invoice are an improvement compared to the original proposal. Even though cross-checks will be carried out automatically this by itself will not prevent or combat fraud. Staff and resources are necessary to investigate possible mismatches and fraud cases. This should be done carefully in order not to infringe fundamental rights of businesses.More information
On 5 November 2024 the EU Member States reached an agreement on the ViDA proposal. This will result in significant changes in the field of VAT in the future.
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