ViDA: Single VAT registration
ViDA: Single VAT registration
The single VAT registration of ViDA has the objective to drastically limit the number of VAT registration of businesses in the EU. Ideally a business should be registered in its Member State of establishment only. However, there may still be situations where a business must register in multiple EU Member States.
Like under the original proposal the new text makes clear that the OSS will be extend to cover domestic supplies of goods, supplies with installation or assembly, supplies on board of an EU passenger transport and supplies of electricity,gas, heat and cooling. The OSS only applies in case the supplier is not established in the Member State where those supplies are made.
Changes will take effect on 1 July 2027.
Like under the original proposal the ViDA proposal covers an extension of the mandatory reverse charge. The reverse charge rule will be applicable on all B2B-supplies of goods and services where the supplier is not established in the EU Member State where VAT is due and the receipient is identified for VAT in that Member State. The supplier is required to include the supply for which the VAT is reverse charged in its recaputalative statement. Later when digital reporting obligations apply these supplies are also in scope of the digital reporting requirements. Supplies of goods under the margin scheme for second hand goods are excluded from the reverse charge mechanism.
Member States may also make the receipient liable for VAT on the transaction if it is not VAT registered in the EU Member State where VAT is due. This provision is however optional.
Changes will take effect on 1 July 2027.
Like under the original proposal the new text includes the introduction of a new scheme for transfer of own goods. The special scheme is open to both EU and non-EU businesses. Under the scheme monthly VAT returns have to be filed in which transfers made are to be reported. Transfers made under the scheme do not have to be reported in the recaputalitive statement (at a later stage they are also not included in digital reporting obligations). The intra-Community acquistion in the EU Member State of arrival of the goods is exempt from VAT. Transfers of capital goods can be included in the scheme (different from the original proposal). However, goods in relation to which there is no full right to deduction in the Member State of arrival are not covered.
Different from the orginal proposal, in case a platform transfers goods on behalf of the business operating on the platform, the business and not the platform is required to report the transfer of own goods. For this the business can use the special scheme. There is an obligation for the platform to inform the business of whom the goods are transfered in case the transfer has not been done at the explicit requirest of the latter. The platfrom should inform the business at the latest upon transport or dispatch of the goods.
Changes will take effect on 1 July 2027.
The call-of-stock arrangement will be abolished because of the new special scheme. The last transfer of own goods under the call-of-stock scheme can be made on 30 June 2027 and the goods should be supplied to the customer on 30 June 2028 at the latest.
In the original proposal the European Commission proposed an extension of the deeming provision for all supplies made within the EU. This proposal has been abandoned. The European Commission also proposed a mandatory application of the I-OSS for platforms in case they are a deemed supplier. This part has been dropped under ViDA and will be discussed in the context of the customs reform.
The deemed supplier rule will be evaluated by the Commission which will present a report at the latest on 1 July 2027. Following the report the deemed supplier rule might be extended.
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.
More information.
Components of the Single VAT registration
The proposal on the single VAT registration covers three components:- An extension of the One Stop Shop regime (OSS).
- An extension of the mandatory reverse charge rule.
- The introduction of a special scheme for the transfer of own goods.
1. Extension of the OSS
Under the OSS businesses are allowed to file a single VAT return and make a single VAT payemnt for VAT due in all EU Member States. The EU Member State where the business is registered for the scheme will forward the relevant part of the VAT return and VAT payment to the EU Member State where VAT is due. Currently the OSS covers EU distance sales and B2C-services. For platforms that act as deemed supplier (see below) the scheme also covers domestic B2C-supplies within the EU.Like under the original proposal the new text makes clear that the OSS will be extend to cover domestic supplies of goods, supplies with installation or assembly, supplies on board of an EU passenger transport and supplies of electricity,gas, heat and cooling. The OSS only applies in case the supplier is not established in the Member State where those supplies are made.
Changes will take effect on 1 July 2027.
2. Extension of the mandatory reverse charge rule
For certain transactions EU Member States are required to implement a reverse charge rule. For other transactions they may, but are not required to implement a reverse charge rule. Under the reverse charge rule the receipient instead of the supplier will report the VAT due. If and in so far the receipient has a right to deduct VAT it will deduct the VAT in the same VAT return. If the receipient has a full right to deduct VAT this will on balance result in a nil VAT payment.Like under the original proposal the ViDA proposal covers an extension of the mandatory reverse charge. The reverse charge rule will be applicable on all B2B-supplies of goods and services where the supplier is not established in the EU Member State where VAT is due and the receipient is identified for VAT in that Member State. The supplier is required to include the supply for which the VAT is reverse charged in its recaputalative statement. Later when digital reporting obligations apply these supplies are also in scope of the digital reporting requirements. Supplies of goods under the margin scheme for second hand goods are excluded from the reverse charge mechanism.
Member States may also make the receipient liable for VAT on the transaction if it is not VAT registered in the EU Member State where VAT is due. This provision is however optional.
Changes will take effect on 1 July 2027.
3. Introduction of special scheme for transfer of own goods
In case a businesses transfers its own goods from one EU Member State to another it is requied to report an intra-Community supply in the Member State of departure and an intra-Community acquisition in the Member State of departure. This is a cause for multiple VAT registrations for businesses in the EU.Like under the original proposal the new text includes the introduction of a new scheme for transfer of own goods. The special scheme is open to both EU and non-EU businesses. Under the scheme monthly VAT returns have to be filed in which transfers made are to be reported. Transfers made under the scheme do not have to be reported in the recaputalitive statement (at a later stage they are also not included in digital reporting obligations). The intra-Community acquistion in the EU Member State of arrival of the goods is exempt from VAT. Transfers of capital goods can be included in the scheme (different from the original proposal). However, goods in relation to which there is no full right to deduction in the Member State of arrival are not covered.
Different from the orginal proposal, in case a platform transfers goods on behalf of the business operating on the platform, the business and not the platform is required to report the transfer of own goods. For this the business can use the special scheme. There is an obligation for the platform to inform the business of whom the goods are transfered in case the transfer has not been done at the explicit requirest of the latter. The platfrom should inform the business at the latest upon transport or dispatch of the goods.
Changes will take effect on 1 July 2027.
The call-of-stock arrangement will be abolished because of the new special scheme. The last transfer of own goods under the call-of-stock scheme can be made on 30 June 2027 and the goods should be supplied to the customer on 30 June 2028 at the latest.
No extension of the deemed supplier rule for platforms
Under a deemed supplier rule a platform is deemed to receive and supply goods for VAT purposes for sales of goods that are made via the platform (for more detailed information about a deemed supplier regime we refer to our earlier article). The deemed supplier rule currenlty covers B2C-supplies of goods orginating from outside the EU (with an intrinsic value of no more than 150 euros) and EU distance sales and domestic B2C-supplies of goods if the supplier is establsihed outside the EU.In the original proposal the European Commission proposed an extension of the deeming provision for all supplies made within the EU. This proposal has been abandoned. The European Commission also proposed a mandatory application of the I-OSS for platforms in case they are a deemed supplier. This part has been dropped under ViDA and will be discussed in the context of the customs reform.
The deemed supplier rule will be evaluated by the Commission which will present a report at the latest on 1 July 2027. Following the report the deemed supplier rule might be extended.
BDO’s position
The extension of the reverse charge rule and the OSS will be welcomed by businesses that can avoid multiple VAT registrations with the related administrative and cost burdens. It should be noted that supplies covered by the new reverse charge rule will also be covered by the digital reporting requirements as of 1 July 2030. We are happy to see that the EU Member States have taken the comments by both practice and academia into account and have limited the extension of the deeming provision. To us it comes as a suprise that the obligation of platforms to report transfer of own goods they have made on behalf of suppliers operating on the platform has been abandoned. In practice this would be very helpful as it is the platform and not the underlying supplier transfering goods in that situation. It is unfortunate that transfers of own goods still have to be declared, but the OSS does make this process easier. Businesses will need to make sure to comply with the rules to avoid penalties or exclusion from the scheme.
ViDA proposals adopted – significant changes in VAT coming
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.More information.