Deloitte Services & Investments

Deloitte Belastingconsulenten/Conseils Fiscaux Besloten vennootschap/Société à responsabilité limitée (private limited liability company) Registered Office: Gateway building, Luchthaven Brussel Nationaal 1 J, 1930 Zaventem Member of Deloitte Touche Tohmatsu Limited European Commission Taxation And Customs Union Directorate General SPA3 08/015, B-1049 Brussels, Belgium 30 March 2023 Dear Sir or Madam, Response to the European Commission Public Consultation on the proposals for Value Added Tax (VAT) rules for the digital age (ViDA) We are pleased to respond on behalf of the Deloitte1 firms in the European Union to the European Commission Public Consultation on the proposals published by the European Commission on 8 December 2022: • Proposal for a Council Directive amending Directive 2006/112/EC (VAT Directive) as regards VAT rules in the Digital Age; • Proposal for a Council Regulation…

Regulation (EU) No 282/2011 (VAT Implementing Regulation) as regards information requirements for certain VAT schemes. We welcome the opportunity for debate on this topic. This letter is submitted to provide practical comments and request clarifications regarding the Proposals. Background The European Commission released its ViDA proposals for changes to the VAT Directive, the Regulation on VAT administrative cooperation and the VAT Implementing Regulation on 8 December 2022. The proposals contain a large number of detailed changes to the current VAT legislation, which would enter into force at different points in time ranging from 1 January 2024 till 1 January 2028. 1 For more information, see Deloitte. Deloitte Belastingconsulenten Gateway building Luchthaven Brussel Nationaal 1 J 1930 Zaventem Belgium Tel. + 32 2 600 60 00 Fax + 32 2 600 67 03 Ref.

…building Luchthaven Brussel Nationaal 1 J 1930 Zaventem Belgium Tel. + 32 2 600 60 00 Fax + 32 2 600 67 03 Ref. Ares(2023)2379603 - 02/04/2023 2 Key highlights of the proposals are: - the digital reporting requirements (DRR) for intra-EU supplies of goods and services, with transactional and near real time data transmission from structured electronic invoices; - the new liabilities for VAT collection imposed on platforms facilitating short term accommodation rental and passenger transport as well as on e-commerce marketplaces (extending the 2021 deemed supplier rule to all marketplace goods transactions); - the creation of new and extended possibilities for business trading across borders to report their transactions through a single VAT registration in the EU.

…for business trading across borders to report their transactions through a single VAT registration in the EU. Key Recommendations for Changes to Legislative Proposals - We would recommend sufficient lead time on key changes, taking into account that further detailed technical requirements must be available before Member States and business will be able to effectively start preparing and adapting; - We would suggest to better align the different subparts of the ViDA proposals with the broader technical and policy domains, such as the evolution of the European e-invoicing standard, the revision of the travel sector VAT treatment, etc.; - We would recommend that more detailed measures, requirements and technical standards are defined at the level of the European VAT legislation, to achieve the convergence of national applications and systems for domestic and intra-EU DRR that will help…

…affecting the process of issuing invoices that have now been added to the DRR requirements should be reconsidered. - We would be happy to contribute to developing together with other stakeholders the necessary guidance and detailed implementation requirements and look forward to the continued dialogue with the Commission. Specific comments on the ViDA proposals 1. E-invoicing and digital reporting requirements (DRR) We support the need for an EU initiative in the field of DRR’s and recognize the validity of the key objectives of such initiative, i.e. being to : - Foster the adoption of DRR’s making optimal use of digital technologies to improve VAT compliance and fight VAT fraud; - Achieve convergence of national DRR’s currently emerging in Europe, to improve legal certainty, reduce market fragmentation and increase ease of compliance for businesses.

…in Europe, to improve legal certainty, reduce market fragmentation and increase ease of compliance for businesses. 3 The choice to base the intra-EU DRR on a structured e-invoicing obligation is welcomed, as a thriving industry of service providers has developed to provide or support businesses with convenient and compliant e-invoicing services, allowing to combine the tax compliance and control objectives with more efficient and environmentally friendly business processes. The choice for the EN16391 standard as a mandatory format for all DRR allows to capitalize on the wide adoption in B2G e-invoicing, but it may not take all B2B e-invoicing scenarios into account. Urgent progress on the revision of specifications of EN16391, in order to make it fit for purpose for wider use, will be essential for an efficient adoption of structured e-invoicing.

…order to make it fit for purpose for wider use, will be essential for an efficient adoption of structured e-invoicing. To achieve the convergence needed to simplify the implementation of DRR (EU and domestic), the legislation should in our view bring a higher level of detail on the requirements that will need to be respected, not only on format but also on transmission protocols and technical specifications. We recommend that a limited set of possible approaches that are aligned to the core design principles required under EU legislation would be defined as part of the proposal. Examples include the Peppol CTC model (decentralized real-time reporting model with regulated exchange).

…the proposal. Examples include the Peppol CTC model (decentralized real-time reporting model with regulated exchange). Also, a clear definition of the concepts of prior mandatory authorization or verification by the tax authorities that Member States shall observe in the implementation of e-invoicing mandates linked to DRR is required. Uniformity in approach in setting the requirements for the sharing of data on intra-EU transactions with the national tax authorities will help achieve the goal of simplicity which is proven to encourage tax compliance and reduce the VAT gap. It is recommended that the scope of cross-border transactions for intra-EU DRR, as well as the reporting responsibility of the supplier/recipient, be specifically clarified using either a definition and/or illustrations.

…of the supplier/recipient, be specifically clarified using either a definition and/or illustrations. Measures to promote convergence of domestic e-invoicing and/or e-reporting regimes will specifically be needed on a short term horizon, as a significant number of Member States plan to introduce such regimes in the next 3 to 5 years, anticipating the introduction of an intra-EU DRR. Ideally, more stringent rules in addition to the proposed provisions in article 218 (2) of the VAT Directive should be envisaged, such as a mandatory minimum delay between the adoption of the detailed national measures and their effective date (two years appears to be a feasible delay).

…adoption of the detailed national measures and their effective date (two years appears to be a feasible delay). Convergence can also be increased through a notification obligation whereunder Member States must inform the European Commission of draft technical regulations taken in respect of DRR before their adoption, allowing for a standstill period during which the Commission and other Member States examine the proposed regulations and respond (similar to what exists in other EU legislative domains, e.g. for technical regulations for products and information society services – Directive 2015/1535). The measures proposed in respect of the timing for issuing invoices will place a very high workload on businesses both to adapt their processes and systems and to continuously respect these deadlines.

…very high workload on businesses both to adapt their processes and systems and to continuously respect these deadlines. This invoicing deadline would be disproportionate as it is not needed for an efficient functioning of a (intra-EU or national) DRR. Particularly in a B2B context, verifying transactions for VAT purposes should be based upon the financial processes and systems that fit with the business organization and can be very different depending on size and sector. The rules in respect of the tax point and invoice issuance period are mainly defined on national level and present a high degree of stability. The DRR should therefore start from the invoices issued in line with those rules.

…present a high degree of stability. The DRR should therefore start from the invoices issued in line with those rules. At the same level, there is no basis for the proposed retraction of any possibility to issue summary invoices that regroup transactions with different tax point dates (currently already restricted to a calendar month period). Apart from being applied in multiple sectors, the ability for companies in a supply chain to issue summary invoices is an important easement within corporate groups, taking into account that intra-group transactions constitute a significant subset of the cross border transactions that are the focus of the DRR. The new data requirements on invoices in respect of financial accounts and payment due dates are also not essential to control the proper accounting for VAT in a B2B context and should therefore be dropped.

29 → 12

originalus šaltinis (PDF) ↗

Deloitte EU Policy Centre Rond-point Robert Schumanplein 11 1040 Brussels Belgium Tel: + 32 2 639 48 96 www.deloitte.com Appendix to response to European Commission public consultation on the functioning of the administrative cooperation in the field of direct taxation – submitted on behalf of European Union member firms of Deloitte Touche Tohmatsu Limited. Please see www.deloitte.com/about for a description of the legal structure of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its member firms, each of which is a legally separate and independent entity. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited ("DTTL"), its global network of member firms and their related entities. DTTL (also referred to as "Deloitte Global") and each of its member firms are legally separate and independent entities. DTTL does not provide services to clients.

…and each of its member firms are legally separate and independent entities. DTTL does not provide services to clients. Please see www.deloitte.be/about to learn more. © 2019 Deloitte Belgium European Commission DG for Taxation and Customs Union Direct Tax Policy & Cooperation – Unit TAXUD/D2 Rue de Spa 2, Office SPA3 06/069 1049 Brussels Belgium 4 March 2019 Dear Sirs, Additional response to European Commission Public Consultation on the functioning of the administrative cooperation in the field of direct taxation We are pleased to respond on behalf of the European Union member firms of Deloitte Touche Tohmatsu Limited to the European Commission Public Consultation on 'the functioning of the administrative cooperation in the field of direct taxation' and welcome the opportunity for debate on this topic.

…the administrative cooperation in the field of direct taxation' and welcome the opportunity for debate on this topic. This letter is submitted to provide background context and additional comments to the replies submitted using the online questionnaire. 1. Existing and new legislation and initiatives The overall assessment of the Directive should, in our view, take into account the combined effects of the existing and new legislation and initiatives in the field of direct taxation. Recent EU legislation has and will significantly curtail previous tax practices – the EU has over the past years adopted major pieces of tax legislation (ATAD 1 and 2, the various DACs, including the recent DAC6) that already have or will significantly limit previous tax practices, following the OECD/G20 BEPS project to curtail international tax planning and increase transparency.

…tax practices, following the OECD/G20 BEPS project to curtail international tax planning and increase transparency. All these pieces of legislation have either recently come into force or are about to come into force within the next 12-24 months and have, or will when implemented, create many mechanisms and requirements allowing tax and other authorities to receive and exchange information regarding tax payers, such as the Anti-Money Laundering Directives, the Directive on Administrative Cooperation between tax authorities which will include automatic exchange of CBCR and information on cross-border tax rulings and advance pricing arrangements and the Anti-Tax Avoidance Directive, as well as Mandatory Disclosures for Intermediaries. Ref.

…pricing arrangements and the Anti-Tax Avoidance Directive, as well as Mandatory Disclosures for Intermediaries. Ref. Ares(2019)6268005 - 10/10/2019 Page 2 Appendix to response to European Commission public consultation on the functioning of the administrative cooperation in the field of direct taxation – submitted on behalf of European Union member firms of Deloitte Touche Tohmatsu Limited. Please see www.deloitte.com/about for a description of the legal structure of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its member firms, each of which is a legally separate and independent entity. Now is the time for both business and tax administrations to digest the tax law changes that have and will occur in the future.

…time for both business and tax administrations to digest the tax law changes that have and will occur in the future. EU governments and institutions need to give these changes time to get properly embedded into tax systems, locally and internationally, so that the full impact can be administered and assessed. This will allow taxpayers to fully comply with the new tax laws and allow EU governments and institutions to make well informed tax policy decisions. We therefore recommend carrying out the necessary research and fact finding in order to collect the data on which the EU will be able to take the appropriate decisions to further an effective and efficient implementation of the above pieces of tax legislation as a whole.

…decisions to further an effective and efficient implementation of the above pieces of tax legislation as a whole. The tax law changes that are and will continue to be effective are causing a significant increase in taxpayers’ income tax liabilities, compliance costs, reporting requirements, and level of uncertainty. We would like to emphasise that the assessment of the effectiveness and efficiency of the functioning of the Directive and other combined measures should take into account the costs related to the implementation of these new EU tax measures for taxpayers and for tax and other administrations, which are increasing with the development of new reporting requirements. 2. Clarity regarding the goals and the effects of the Directive All governments use tax incentives to stimulate areas of priority.

…regarding the goals and the effects of the Directive All governments use tax incentives to stimulate areas of priority. The sentence used in the online questionnaire namely: “Reduce incentives for Member States to offer particularly favourable tax conditions not available to other taxpayers tax conditions, thus competing for tax revenues with other Member States” is in our view not appropriate in light of the objective pursued by administrative cooperation in the field of direct taxation, i.e. giving the appropriate tools to tax and other administrations to ensure that all taxpayers effectively pay their taxes in compliance with the applicable tax legislations in their Member State of residence.

…effectively pay their taxes in compliance with the applicable tax legislations in their Member State of residence. Changes with regard to tax incentives would not result from administrative cooperation itself but would rather stem from a political environment which is much less in favour of competition between states based on tax. We welcome and support the increase of transparency towards tax and other competent authorities regarding the tax planning of companies active in several EU Member States. Such transparency would however not be meaningful to the public as their perception of the tax positions of certain taxpayers from raw data may be distorted given the complexity and technical nature of the underlying tax rules, which were applied to these specific factual and legal situations.

…and technical nature of the underlying tax rules, which were applied to these specific factual and legal situations. Please note that our answers are best estimates based on a rule of thumb as we have not carried out any particular studies in relation to some of the specific questions addressed to providers of tax advice and accountancy services namely: “What is the share of your clients earning incomes from/ owning financial assets in other EU MS?” and “How often were your clients subject to audits, checks, verifications, or requests for clarifications on foreign income/assets by their home country tax authority?”. 3. Need for a balanced system International tax systems were built in an era before globalisation and digitalisation and that raises questions as to whether they are fit for purpose today.

…an era before globalisation and digitalisation and that raises questions as to whether they are fit for purpose today. This obsolescence has contributed to both non-taxation issues (arising from tax evasion and tax avoidance) and double taxation issues. The international tax rules are in the midst of substantial current changes following the Page 3 Appendix to response to European Commission public consultation on the functioning of the administrative cooperation in the field of direct taxation – submitted on behalf of European Union member firms of Deloitte Touche Tohmatsu Limited. Please see www.deloitte.com/about for a description of the legal structure of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its member firms, each of which is a legally separate and independent entity.

…private company limited by guarantee, and its member firms, each of which is a legally separate and independent entity. OECD/G20 BEPS project which focused on curtailing international tax planning and increasing transparency. Cooperation between countries is far superior to unilateral action, which leads to double taxation and is detrimental to global economic growth. Despite the increasing cooperation between Members States, double taxation is growing in the EU and represents a serious threat to the growth of cross border business within the single market. We would thus like to emphasise the need for a balanced tax system, not only taking care of non-taxation issues, but also addressing double taxation issues. We would be happy to discuss any comments or questions you may have regarding our responses and can be reached as follows: [email protected] or [email protected].

13 → 12

originalus šaltinis (PDF) ↗