October 7, 2022

SMEs agree that digitalisation of Value Added Tax Systems could make VAT compliance easier and welcome the intentions put forward by the European Commission in the  “VAT in the digital age” consultation (Spring 2022). SMEunited has, however, expressed some concerns in its position paper in September, which includes concrete suggestions for transactional reporting obligations and the VAT One-Stop Shop (OSS). The proposals aim to make digital VAT systems fit for SMEs and should become part of the European Commission’s upcoming legislative proposals.

The European Commission plans to publish a legal proposal on digital VAT in the 4th quarter of 2022. Therefore, SMEunited Economic Policy Director Gerhard Huemer and Carsten Rothbart (ZDH), the representative from SMEunited in the EU VAT Forum and the VAT Expert Group, exchange with officials from DG TAXUD about the consultation and the suggestions put forward by SMEunited.

On electronic reporting systems, SMEunited asks for additional and accompanying actions to ensure an effective transition for SMEs. Lawmakers should understand that the acceptance of using electronic invoices in a certain data format and their prompt transfer to an electronic reporting system in the SME sector depends not only on improved efficiency but also requires facilitation measures.

Furthermore, SMEs are likely to see the OSS as an opportunity to consolidate tax registration in other EU Member States, SMEunited stressed Nevertheless, the expectations from the OSS have not yet been met. Shortcomings include:

•          Registration on platforms must be easier

•          Ensuring a clearer definition of the terms “assembly and installation” or extending the OSS to all transactions

•          Providing legal certainty on applicable VAT rates and customer (consumer or company) status on the VAT portals

•          Reporting turnover via the OSS when purchasing in a host country.

Source: SME United
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.