Value added tax (VAT) is one of the key revenue raisers in national budgets, representing on average almost one-fifth of all tax revenue collected in the European Union (EU).
To help strengthen the fight against VAT fraud and reduce the administrative burden for businesses, the European Commission tabled a three-part initiative – VAT in the Digital Age – on 8 December 2022.
As a first objective, the Commission proposes to introduce an EU-wide reporting system on intra-EU business-to-business (B2B) transactions, whereby companies would share, in real-time, data drawn from electronic invoices with the authorities.
This would allow Member States to keep a close eye on the trail of VAT collected and to intervene when there is suspicion of fraudulent practices.
Second, the European Commission proposes to introduce a harmonised framework for charging VAT in passenger transport and short-term accommodation platforms.
Lastly, the initiative proposes measures to lower VAT compliance costs for companies operating across borders. For the proposal to become a directive, the Council needs to vote on it with unanimity, after having consulted the European Parliament and the European Economic and Social Committee.
For the proposal to become a directive, the Council needs to vote on it with unanimity, after having consulted the European Parliament and the European Economic and Social Committee.
