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Your contact person for this topic:
Thomas Hermie
Tax lawyer
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Contact:
- +32 11 29 47 01
- t.hermie@euregio.law
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Further publications on this topic:
- New VAT exemption for small businesses in Belgium and the EU from 2025
- E-commerce in Belgium: VAT regulations
- Status of VAT modernization and e-invoicing
- VAT Belgium 2025: New VAT rules for businesses
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More on this topic:
- VAT
Two years after the announcement of the „VAT in the Digital Age“ (ViDA) package, the Member States of the European Union adopted a new compromise proposal at the EU ECOFIN on 5 November 2024. The aim of this proposal is to modernize the EU VAT system. In addition to (further) postponed implementation deadlines, the following was agreed.
1. Removal of prior EU approval for national e-invoicing
Member States may now make the issuance of electronic invoices mandatory for domestic transactions, without having to get approval first from the European Council and Commission. This may only apply to purely domestic transactions (no cross-border operations) and businesses established in that Member State. As from 2025, Member States may also stipulate that a customer is obliged to accept electronic invoices. Only as of 2035 there should be harmonization at local level.
This is good news for Belgium, which recently passed legislation to implement e-invoicing for domestic B2B transactions as from 2026. Hence, Belgium may proceed with this initiative, pending the final published European ViDA legislation.
2. Electronic invoicing and digital reporting for intra-Community transactions
Gradually, the aim is to achieve full harmonization by 2035. This includes the replacement of the current system of submitting European Sales Listing in the Member States, which, according to Europe, is susceptible to fraud. Therefore, for cross-border intra-community B2B and B2G transactions, as from 1 July 2030 (the implementation date has thus been postponed), it is planned to require i) electronic invoices to be issued according to a single structured format (EU standard EN 16931), and ii) digital reporting via a new reporting system (which will request more data than the current one, e.g. bank details). As of 2030, the following operations will thus have to be reported transaction by transaction via the new digital reporting system, instead of being declared periodically in the current European Sales Listings:
- Intra-Community supplies and acquisitions of goods, excluding transfers of own goods. Member States may also opt to exclude intra-Community acquisitions/purchases from this.
- Supplies and acquisitions of goods and services for which the customer is liable to self-account for VAT through a reverse charge mechanism. Again, Member States can also opt to exclude purchases from this.
In addition, the new ViDA proposal contains the following points, of which most are a relaxation compared to the original 2022 proposal:
- E-invoices for cross-border transactions must be issued within 10 days of the taxable event, instead of the previously proposed 2 days. Note that this deadline is still shorter than the current issue deadline of the 15th of the following month.
- In case of self-billing and cross-border purchases where reverse charge applies (i.e. the recipient is the VAT debtor), the reporting deadline is 5 days from the (legally imposed) invoice issue date.
- Monthly summary invoices are still allowed (under certain conditions).
- ‘Hybrid’ invoices, containing both a structured and unstructured format, are still allowed, provided they contain all necessary information in a structured manner.
- Additional supplementary invoice requirements and statements are introduced and Member States may also impose certain additional information requirements themselves.
- Member States may impose the possession of a valid electronic invoice as a material condition for the entitlement to deduct input VAT.
- Member States that already have an existing ‘e-invoicing system’ in place are given a grace period until 1 January 2035 to bring it up to EU standards. A later Commission decision may extend this deadline if necessary.
This therefore means that after 1 July 2030, we will certainly not obtain full harmonization at EU level and still have to deal with different invoicing and reporting obligations in the various Member States.
3. Changes platform economy for short-term rentals and (road) passenger transport
To counter the current reality of non-payment of VAT on short-term rentals of accommodation and road passenger transport services offered via online platforms and hence unfair competition with traditional accommodation and transport services, but also to help the small underlying providers, the fiction of the ‘deemed supplier’ is introduced.
As from 2030 (Member States may already apply this voluntarily as from July 2028), facilitating platforms will be held liable to withhold VAT as deemed suppliers and pay it to the treasury, unless the underlying service provider itself has provided the platform with its own VAT number.
Member States do retain some flexibility. For example, they may impose additional criteria for short-term rentals, in addition to the “continuous rental of accommodation to the same person for up to 30 nights”, or exclude services falling under the so-called small business scheme from the platform fiction.
The now agreed upon compromise proposal does not extend the deemed supplier fiction to all (B2C) supplies within the EU via digital platforms. Besides for short-term rental of accommodation and passenger transport services, this fiction will only apply to platforms that facilitate the sale of imported goods with a value of up to EUR 150 and goods sold by a non-EU-established supplier from an EU warehouse (i.e. the already existing fiction). However, platforms that store goods for third-party sellers (e.g. in their warehouses) will now always have to inform them of the transfer of these goods to another country.
4. Single VAT registration through extension of the one-stop shop (OSS) system
The introduction date of the single VAT registration has been postponed by one year to 1 July 2028.
Currently, a one-stop-shop (OSS) system already exists that allows reporting and remitting VAT on cross-border B2C sales of goods and services. Local B2C sales (e.g. from a local warehouse) are excluded for the time being.
The OSS system will allow cross-border transfers of own goods to be reported as from 2028 (making the current call-off stock scheme redundant), as well as all domestic B2C sales of goods by non-established suppliers (including supply with installation, supplies of goods on board of ships, planes or trains and of energy such as gas, heating and electricity – important for electric vehicle charging). Sales under margin scheme did not make it into the text of the compromise proposal. Nor can the OSS system be used for the transfer of goods for which there is no full right to deduct input VAT.
The ViDA proposal also wants to make the application of a reverse charge mechanism mandatory in case the supplier is not established nor VAT registered for VAT purposes in the Member State where the VAT is due, but the customer is.
Consequently, the ViDA package will not eliminate all local VAT registrations (e.g. in the case of intra-Community supplies between third parties). Moreover, a major drawback is that the OSS system does not provide for periodic recovery of input VAT in countries where a local VAT registration will no longer be maintained. Thus, if one no longer has a local VAT number in this Member State, one will have to reclaim the local input VAT through the ‘VAT Refund’ portal in the Member State of establishment and the refund will take considerably longer.
Now the text of the compromise proposal goes back to the European Parliament again for re-approval. The text must then be formally accepted by the Council before being published in the EU’s Official Journal and can enter into force. This is expected to happen, but it can never be entirely ruled out that this may still fail to obtain the required unanimity for formal adoption. In any case, this will take several months, given the size of the package.
Do you have a question or concern?
Do you have questions about VAT in Belgium and intra-community transactions within the EU? Feel free to contact our VAT lawyer Thomas Hermie. By e-mail to t.hermie@euregio.law or by phone on +32 11 29 47 00.
