European Tax Adviser Federation

…1 ETAF statement on the proposal for an eighth amendment to the Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC8) The European Tax Adviser Federation (ETAF), which represents 215 000 regulated tax advisers, would like to thank the European Commission for the opportunity to comment on its proposal for an eighth amendment to the Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC8), published on 8 December 2022. We welcome the main purpose of this proposal, which is to extend the mandatory automatic exchange of information between EU Member States to income earned through crypto assets. However, the Commission also took this opportunity to include broader changes to the directive, some of them being of high concerns for ETAF members. I.

…this opportunity to include broader changes to the directive, some of them being of high concerns for ETAF members. I. General comments on the proposed extensions In principle, ETAF welcomes the extension of the mandatory automatic exchange of information to income earned through crypto assets as well as to information to advance cross- border rulings to high-net-worth individuals and to non-custodial dividend income. We believe that these measures will help tax administrations to better identify and fight tax fraud and money laundering. However, these extensions will again result in more administrative burden for tax advisers and tax authorities.

However, these extensions will again result in more administrative burden for tax advisers and tax authorities. On a more general note, we have to point out that the successive changes to the Directive on administrative cooperation in the field of taxation (DAC) have been adopted at an incredible speed these last years and the tax professionals have had difficulties to keep up with the fast- changing rules and assimilate them properly, in particular in small tax firms. The latest change to the DAC, to extend the automatic exchange of information to digital platforms (DAC7), started to apply just a few months ago, on 1 January 2023, and Member States are already about to adopt the next change. The EU needs to take some perspective and assess the effectiveness of previous changes to the Directive before releasing new measures.

…take some perspective and assess the effectiveness of previous changes to the Directive before releasing new measures. Therefore, ETAF is very much looking forward to the planned evaluation of the “effectiveness, efficiency and continued relevance of the DAC and its amendments (DAC2 to DAC6)” during the third quarter 2024, as announced by the Commission. Ref. Ares(2023)2303433 - 30/03/2023 2 II. Specific comments on the proposed minimum penalties On the legality of the measure The main concern of ETAF relates to the proposed minimum penalties. While the current Directive only foresees that Member States shall lay down rules on penalties that should be “effective, proportionate and dissuasive”, the DAC8 proposal would introduce a set of different minimum penalties depending on the infringement, the turnover of the non-compliant entity and on whether it concerns a company or an individual.

…on the infringement, the turnover of the non-compliant entity and on whether it concerns a company or an individual. According to the proposal, the minimum level of financial penalty would apply only after two valid administrative reminders or when the provided information contains incomplete, incorrect or false data, amounting to more than 25% of the information that should be reported. This would apply to the DAC8 reporting requirements but also for the public country by country reporting (DAC4), cross-border arrangements (DAC6) and revenues made by sellers on online platforms (DAC7). The Commission justifies the need for such harmonization by the fact that the differences in the level of penalties between Members States would jeopardize the efficiency of the DAC. We highly reject this argument.

…level of penalties between Members States would jeopardize the efficiency of the DAC. We highly reject this argument. In the case of DAC6 for instance, a study ordered by the FISC subcommittee of the European Parliament in March 20221 clearly shows that the failure of the Directive to achieve the effects anticipated by the Commission can be to a large extent attributed to the vagueness of the hallmarks introduced to identify and report on potentially aggressive tax planning schemes as well as to the absence of definitions of fundamental terms. Going further, we would like to express our doubts about the legality of the determination of penalties levels by the European Commission.

…like to express our doubts about the legality of the determination of penalties levels by the European Commission. According to article 83(1) of the Treaty on the Functioning of the European Union (TFEU), the European legislators may establish minimum rules for penalties if it concerns particularly serious crimes with a cross-border dimension. In particular, the article lists the following areas of crime: terrorism, trafficking in human beings and sexual exploitation of women and children, illicit drug trafficking, illicit arms trafficking, money laundering, corruption, counterfeiting of means of payment, computer crime and organised crime. However, a breach of the obligation to report cross-border tax arrangements cannot be attributed to any of these offences.

…a breach of the obligation to report cross-border tax arrangements cannot be attributed to any of these offences. Pursuant to article 83(2), approximation of criminal law provisions of Member States is still possible in other areas than the ones listed above to ensure the effective implementation of an EU policy. However, this would suppose proving that the measure is essential for the effectiveness of the implementation of the policy concerned or the lack of any alternative. However, as far as ETAF is aware, an investigation of other possible measures, such as a better control in the Member States or the use of more user-friendly software in the implementation of the reporting obligations, has not been carried out.

…or the use of more user-friendly software in the implementation of the reporting obligations, has not been carried out. 1 1 HASLEHNER, W., PANTAZATOU, K., 2022, Assessment of recent anti-tax avoidance and evasion measures (ATAD & DAC 6), Publication for the Subcommittee on tax matters (FISC), Policy Department for Economic, Scientific and Quality of Life Policies, European Parliament, Luxembourg. 3 On the proportionality of the measure Furthermore, it is also questionable whether the sanction levels proposed can actually be qualified as “minimum penalties”. A minimum penalty is usually determined by approximating the average level of penalties in the Member States.

A minimum penalty is usually determined by approximating the average level of penalties in the Member States. In this case, Member States with a lower level of penalties would have to increase it accordingly, while Member States with a higher level of penalties would be able to go beyond the minimum penalties and maintain their own level. However, ETAF doubts that the proposed penalties meet these criteria as they would in reality amount to the maximum penalty for the vast majority of Member States. In particular, in case of non-compliance with the mandatory exchange of information on reportable cross-border arrangements (DAC6), the proposal foresees that the minimum pecuniary penalty shall be not less than 50 000 € when the annual turnover of the intermediary or relevant taxpayer is below 6 million € and 150 000 € when the turnover is 6 million € or above.

…of the intermediary or relevant taxpayer is below 6 million € and 150 000 € when the turnover is 6 million € or above. The minimum pecuniary penalty shall be not less than 20 000 € when the intermediary or the relevant taxpayer is a natural person. In most ETAF members’ countries, the minimum penalties proposed by the Commission are way above the existing levels of penalties. In France, failure to comply with DAC6 requirements leads to the application of a fine which may not exceed 10 000 € or 5 000 € in the case of the first offence in the current calendar year and in the three preceding years2. The maximum total amount of penalties that can be imposed on an intermediary or a taxpayer in a calendar year is also capped to 100 000 €. In Germany, the maximum penalty is currently 25 000 €3, in Romania it is up to 100 000 RON4, i.e. around 20 000 €, and in Hungary up to 5 million HUF, i.e.

…000 €3, in Romania it is up to 100 000 RON4, i.e. around 20 000 €, and in Hungary up to 5 million HUF, i.e. around 13 000 €5. In Belgium, the maximum level of penalty can reach 100 000 €. However, the country has chosen to make a distinction between incomplete reporting and no or late reporting and applies a much lower range of penalties from 1 250 € to 25 000 € for incomplete reporting6. In our view, the minimum penalties proposed by the Commission are disproportionate and do not take into account the different economic situations and legal traditions of Member States. It is also unclear how the 25% of information that should be reported will be calculated and whether all types of incomplete, incorrect or false information will be put on an egal footing. For instance, will a forgotten street number in the address count as much as a knowingly wrong turnover?

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…1 ETAF statement on the evaluation of the Anti-Tax Avoidance Directive (ATAD) Introduction The European Tax Adviser Federation (ETAF) would like to thank the European Commission for the opportunity to comment on its evaluation of the Council Directive (EU) 2016/11641 of 12 July 2016 (the Anti-tax Avoidance Directive – ATAD1), as amended by Council Directive (EU) 2017/9522 of 29 May 2017 (ATAD2). We view the ATAD as an important tool laying down minimum standard measures on addressing the most common forms of aggressive tax planning and tax avoidance practices that directly affect the functioning of the internal market. It provides for measures in five areas which Member States are required to implement: an interest limitation rule, exit taxation, controlled foreign company (CFC) rules, hybrid mismatches rule and a general anti-abuse (GAAR) rule.

…exit taxation, controlled foreign company (CFC) rules, hybrid mismatches rule and a general anti-abuse (GAAR) rule. As a preliminary remark, ETAF would like to highlight the multiplication of EU anti-abuse measures these last years, with ATAD1, ATAD2, the Minimum Tax Directive, the successive DACs and more recently the UNSHELL Directive proposal, also known as ATAD3. To avoid any potential overlapping and overregulation, which could hamper efficiency, we believe that, before releasing any new measure, the Commission should thoroughly evaluate the existing legislation in this field. For this reason, we welcome very much the evaluation of the ATAD as a concrete action in the framework of the ongoing European Commission’s effort to rationalise EU reporting requirements.

…concrete action in the framework of the ongoing European Commission’s effort to rationalise EU reporting requirements. We support the five evaluation criteria chosen by the Commission (effectiveness, efficiency, relevance, coherence and EU added value). We also believe that the evaluation should focus on finding concrete solutions to provide relief for companies in the scope of the Minimum Tax Directive regarding the application of ATAD CFC rules, while safeguarding the effectiveness of the EU’s anti-tax avoidance rules. I. Relevance and effectiveness of the GAAR The general anti-abuse rule (Article 6 of the ATAD) tackles abusive tax practices that have not been dealt with through specifically targeted provisions.

…6 of the ATAD) tackles abusive tax practices that have not been dealt with through specifically targeted provisions. The ATAD requires the GAAR to be applied to any arrangement that is “put into place for the main purpose or one of the main purposes of obtaining a tax advantage that defeats the object or purpose of the applicable tax law” and “is not genuine having regard to all relevant facts and circumstances”, including economic reasons. Ref. Ares(2024)6398494 - 10/09/2024 2 The GAAR constitutes a minimum standard and not a genuine definition of aggressive tax planning and is by nature uncertain in its interpretation. Article 6 is completed by the important recital 11, which makes it clear that taxpayers should have the “right to choose the most tax efficient structure” for their commercial affairs, limited only by the requirement that these should not be “non-genuine”.

…structure” for their commercial affairs, limited only by the requirement that these should not be “non-genuine”. Any changes to the terms of the GAAR might reveal counterproductive as it would likely raise new uncertainties rather than effectively clarifying open questions. The publication of guidance by the Commission on its view regarding interpretation and application of the GAAR would however be welcomed. II. Implementation challenges The ATAD contains a noticeable number of options for Member States in the application of anti-avoidance rules (e.g. the exclusion of financial undertakings from the interest limitation rule; the extension of the substance carve-out to third-country resident CFCs; the exclusion from the scope of the anti-hybrid rule for certain mismatches resulting from interest payments). In some Member States, the ATAD measures were implemented excessively.

…mismatches resulting from interest payments). In some Member States, the ATAD measures were implemented excessively. In principle, such an excessive implementation would not have been necessary to prevent tax avoidance practices. On the contrary, this now leads to excessive bureaucracy and double taxation, which should not be created by the introduction of ATAD (e. g. the implementation of the imported mismatches). Our members identified some challenges in applying the anti-hybrid rules. On the one hand, this is due to excessive implementations, in particular concerning the imported mismatches. On the other hand, it is due to the general structure of the rules. The rules leave a number of terms undefined and appear highly complex and wide-ranging, given the need for information about taxation in other countries.

…undefined and appear highly complex and wide-ranging, given the need for information about taxation in other countries. In this context, it should be examined whether these comprehensive rules are still needed within the internal market. Due to the ongoing harmonization of the internal market, there are fewer differences between national corporate tax systems that can be exploited by hybrid mismatches. Both the 2020 Commission’s interim evaluation and a 2022 European Parliament’s study concluded that the Directive allows for too many options for fighting tax avoidance, which resulted in significant differences in the implementation of the ATAD provisions in the Member States and therefore to a greater fragmentation of the internal market, still allowing taxpayers to take advantage of existing legislative gaps in the Member States.

…of the internal market, still allowing taxpayers to take advantage of existing legislative gaps in the Member States. We do agree that a reduction of the number of options should be considered for simplification reason. The margin of discretion of the Member States should be reduced in order to minimise double burden for taxpayers, particularly double taxation and bureaucracy. 3 III. Coherence with other EU Directives 1. ATAD and the Minimum Tax Directive The introduction of the Minimum Tax Directive has created some overlaps with the ATAD Directive. Under the Minimum Tax Directive, MNE groups within the scope of the Directive are obliged to provide comprehensive and detailed information on their profits and effective tax rate in every jurisdiction where they have constituent entities – even if they are already subject to an effective tax rate of at least 15%.

…where they have constituent entities – even if they are already subject to an effective tax rate of at least 15%. In particular, each constituent entity of a multinational group located in an EU Member State will have to file a yearly so-called “top-up tax information return”, unless this return is filed in another jurisdiction with which the EU Member State has an agreement regarding the exchange of information. The top-up tax information return must be filed within 15 months after the end of the fiscal year of the constituent entity and shall notably include identification information on the constituent entities (including their tax identification numbers), information on the overall corporate structure of the MNE group and information that is necessary in order to compute the effective tax rate for each jurisdiction and the top-up tax of each constituent entity.

…in order to compute the effective tax rate for each jurisdiction and the top-up tax of each constituent entity. We consider that with the introduction of the Minimum Tax Directive, most of the information required by the Directive (EU) 2016/1164 laying down rules against tax avoidance practices that directly affect the functioning of the internal market (ATAD1) should be waived for multinational companies meeting Pillar Two thresholds (i.e., more than €750 million of consolidated revenues in at least two of the four preceding years) in order to avoid duplication. In particular, the relation between the Minimum Tax Directive and the Controlled Foreign Company (CFC) rule in the ATAD1 needs clarification. They pursue the same intention, namely the prevention of tax avoidance practices by transferring income to low-tax jurisdictions and they overlap in their scope of application.

…tax avoidance practices by transferring income to low-tax jurisdictions and they overlap in their scope of application. Therefore, the abolishment of the CFC rules should be taken into consideration. A closer look should also be given to the evidence to be provided in accordance with the anti- hybrid mismatches rules set out in ATAD1 and ATAD2. The Minimum Taxation Directive ensures that the income of a group of companies is subject to a minimum tax of 15% in all cases. Accordingly, for groups of companies that fall under the scope of the Minimum Taxation Directive, hybrid mismatches resulting in a deduction without inclusion are no longer possible for these groups of companies. Therefore, an abolishment of the hybrid mismatches rules could also be taken into consideration.

…groups of companies. Therefore, an abolishment of the hybrid mismatches rules could also be taken into consideration. 2. Assessment of the added value of ATAD3 We believe that the European Commission should seize the opportunity of this evaluation to thoroughly assess the added value of its 2021 proposal for a Directive laying down rules to prevent the misuse of shell entities for tax purposes (UNSHELL), also known as ATAD3. We believe that the ATAD1, the exchange of information covered by the successive modifications of the Directive on administrative cooperation in tax matters (DAC), the Transfer Pricing rules and the CFC rules already tackle many of the issues that the UNSHELL Directive is seeking to address. 4 Conclusion ETAF calls on the European Commission to draw all the lessons from this evaluation. The adjustment of the information requirements in relation with the ATAD1 CFC…

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…1 ETAF statement on a possible recast of the Directive on Administrative Cooperation in tax matters (DAC) Ref. Ares(2026)1487578 - 10/02/2026 2 Introduction The European Tax Adviser Federation (ETAF) welcomes the opportunity to contribute to the European Commission’s public consultation on a possible recast of the Directive on administrative cooperation in tax matters (DAC). Since its adoption, the DAC has evolved through a succession of eight legislative amendments (DAC2 to DAC9), reflecting the progressive expansion of reporting and information- exchange obligations at the EU level. While these developments have strengthened administrative cooperation, the cumulative layering of these reporting regimes has resulted in an increasingly complex legislative framework.

…the cumulative layering of these reporting regimes has resulted in an increasingly complex legislative framework. Each additional reporting layer has required new technical and organisational adaptations, with IT and compliance costs varying significantly depending on the nature of the obligation concerned. ETAF observes that the earliest DAC amendments were primarily directed at national tax administrations and focused on the flow and exchange of information. Over time, reporting obligations have increasingly been placed on taxpayers and their advisers, with a growing volume of information that must be created specifically for reporting purposes. This evolution has expanded compliance obligations and raises questions of balance, particularly where stricter deadlines and higher penalties apply to taxpayers and advisers compared to the timelines typically available to tax administrations.

…penalties apply to taxpayers and advisers compared to the timelines typically available to tax administrations. In the absence of a consolidated legal text, the Commission’s intention of merging the original Directive and its subsequent amendments into a single, coherent instrument appears both timely and judicious. As previously stated in our answer to the public consultation on the evaluation of the Directive 2011/16/EU, ETAF welcomes a consolidation of the initial DAC and its subsequent amendments into a single text. ETAF therefore supports the Commission’s initiative to consolidate and recast the DAC as part of its broader objective to reduce administrative burdens, simplify EU legislation and improve the effectiveness of existing reporting frameworks.

…reduce administrative burdens, simplify EU legislation and improve the effectiveness of existing reporting frameworks. In this context, ETAF strongly supports the Commission’s target, set out in its long-term competitiveness Communication, of reducing burdens associated with reporting requirements by 25% for businesses and by 35% for small and medium-sized enterprises (SMEs), without undermining the policy objectives of ensuring efficient administrative cooperation between Member States’ tax authorities and increasing tax transparency in order to combat tax evasion and avoidance and ensure fair taxation.

…tax authorities and increasing tax transparency in order to combat tax evasion and avoidance and ensure fair taxation. At the same time, consolidation should provide an opportunity to assess whether all existing notifications and reporting obligations remain necessary and proportionate, particularly in light of the substantial expansion of EU anti-avoidance legislation (including ATAD I and II and related measures), as well as the forthcoming roll-out of e-invoicing and e-reporting requirements. As highlighted in the Commission’s report of 19 November 2025 evaluating Directive 2011/16/EU, and the accompanying Commission Staff Working Document, the reporting requirements for cross-border arrangements under Directive (EU) 2018/822 (DAC6) are considered particularly problematic.

…for cross-border arrangements under Directive (EU) 2018/822 (DAC6) are considered particularly problematic. ETAF shares this assessment, a position it has consistently articulated, notably in its response to the public consultation on the rationalisation of EU reporting requirements and to the evaluation of Directive 2011/16/EU which covers the period from 2018 to 2023. In light of the above, the legislative work on the DAC recast should give due consideration to the removal of, or at the very least the substantial simplification of, the DAC6 reporting requirements.

…to the removal of, or at the very least the substantial simplification of, the DAC6 reporting requirements. 3 ETAF recommends: remove the DAC 6 reporting obligation entirely As stated in its evaluation report, the Commission has indicated that simplifying the DAC and ensuring its consistent application, with a view to reducing administrative burden, requires not only assessing the scope for improving the internal coherence of the DAC legal framework but by “exploring the options to streamline or eliminate reporting obligations that could be unnecessarily burdensome”. In line with this approach, and reiterating its long-standing position, ETAF therefore calls on the Commission to put forward a legislative proposal to remove the DAC6 reporting obligations in their entirety.

…on the Commission to put forward a legislative proposal to remove the DAC6 reporting obligations in their entirety. Such a removal is justified on the inherent shortcomings of DAC6 identified in the Commission’s evaluation, including its fragmented and inconsistent implementation resulting from its overly broad scope, the limited and inconsistent use of DAC6 data by tax administrations, the disproportionate administrative burden imposed on tax professionals and taxpayers, and the absence of demonstrable and reliably evidenced benefits. (a) Overly broad scope and inconsistencies in national implementation As acknowledged by the Commission’s evaluation report, DAC6 is the most challenging element of the DAC to implement in practice, principally due to the wide margin it allows for divergent interpretation across Member States.

…implement in practice, principally due to the wide margin it allows for divergent interpretation across Member States. In particular, the overly broad scope of the main concepts, such as the main benefit test, has resulted in significant legal uncertainty, affecting not only national tax administrations, but also tax professionals, when determining whether a reporting obligation is triggered. These concerns are widely shared by ETAF’s members and have been recently corroborated by the findings reached by the European Court of Auditors (ECA) in its Special Report of 27 November 2024, which identified significant uncertainties and divergent interpretations in the application of DAC6 across the Member States audited.

…significant uncertainties and divergent interpretations in the application of DAC6 across the Member States audited. These uncertainties and varying interpretations can lead to an inconsistent application of reporting obligations and create a risk that similar cross-border arrangements are reported in some Member States but not in others. These findings are unsurprising, given that the issue has already been recognised in a study ordered by the FISC Subcommittee of the European Parliament in March 2022, which found that the DAC6 did not deliver the effects anticipated by the Commission, noting that the lack of clarity of the hallmarks resulted in fragmented national implementations, inconsistent reporting in terms of quality and quantity, and a disproportionate burden on tax administrations and intermediaries, with potential adverse effects on legitimate transactions.

…burden on tax administrations and intermediaries, with potential adverse effects on legitimate transactions. Overall, the Commission’s evaluation does not clearly demonstrate the amount and nature of potentially abusive tax arrangements most frequently reported under DAC6, nor the categories of companies involved. The Commission notes that legal uncertainty and divergent interpretation contribute to over-reporting and under-reporting, which undermines the operational usefulness of DAC6 data. It therefore does not establish a clear link between DAC6 reporting and concrete outcomes (for example the effective follow-up by the tax authorities, dismantled schemes or a demonstrable contribution to the tax assessments or collections), thereby providing only limited evidence of how the DAC6 hallmarks have supported the Directive’s overall objectives.

…thereby providing only limited evidence of how the DAC6 hallmarks have supported the Directive’s overall objectives. (b) Ineffective use of DAC6 data 4 The Commission’s evaluation assesses effectiveness by reference to the timeliness, completeness and quality of the information exchanged. According to this benchmark, several shortcomings have been identified in relation to the quality and completeness of DAC6 data. While certain mandatory fields are subject to validation, other mandatory informational fields are not subject to systematic assessment, which undermines overall data quality and, consequently, the usability of the information exchanged for risk analysis and follow-up. Additionally, the Special Report of the ECA has identified deficiencies in the completeness of information reported in respect of cross-border arrangements involving non-EU jurisdictions.

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…1 Position paper on the VAT in the digital age package (ViDA) Ref. Ares(2023)2424199 - 04/04/2023 2 Introduction The European Commission published on 8 December 2022 a package of proposals called “VAT in the digital age” (ViDA), which is structured around three main pillars: • the introduction of common e-invoicing and digital reporting requirements, • updated VAT rules for passenger transport and short-term accommodation platforms, • and the introduction of a single VAT registration across the EU. As preliminary remarks, the European Tax Adviser Federation (ETAF), which represents 215 000 regulated tax advisers, would like to point out the importance of this reform for the tax profession as a significant part of today’s service towards SMEs is the preparation of VAT- returns.

…reform for the tax profession as a significant part of today’s service towards SMEs is the preparation of VAT- returns. We see this huge step towards more digitalisation as an opportunity that will free some time for tax advisers to focus more on the core business of their work, i.e. giving advice. However, digitalisation does not come without any risk and some safeguards will have to be put in place to make a successful transition. As a member of the European Commission’s VAT Expert Group, ETAF is happy to provide the European Commission with its comments and recommendations on: • technical parameters of e-invoicing and digital reporting requirements, • the data protection safeguards needed, • gradual implementation for SMEs, • the necessary support from national authorities, • and the role of the regulated tax profession for a smooth transition. 3 I.

…support from national authorities, • and the role of the regulated tax profession for a smooth transition. 3 I. Common e-invoicing and digital reporting requirements A. E-invoicing parameters As already expressed in our answer to the European Commission’s public consultation on 4 May 2022, ETAF members agree and recognize the potential of e-invoicing and digital reporting requirements to reduce tax fraud, in particular missing trader intra-community (MTIC) fraud, if the transition is well managed. To meet this target, we believe that the EU should impose an intelligent e-invoicing standard, which is at the same time human readable and machine readable.

EU should impose an intelligent e-invoicing standard, which is at the same time human readable and machine readable. 1. Definition of electronic invoice According to the proposal, as of 1 January 2024, all businesses will be obliged to be able to issue and receive e-invoices based on the European standard for e-invoicing (EN 16931) for intra-community supplies. Member States will be authorized, but not forced, to introduce mandatory e-invoicing for domestic B2B transactions. E-invoicing systems with mandatory pre-authorisation or verification of the e-invoices by the tax authorities could no longer be introduced, and any existing models would have to be phased out and to converge with the new pan-EU reporting standard by the beginning of 2028. An electronic invoice is defined in the proposal as a document that contains the information required by the Directive and which has been issued,…

…given to Member States is necessary in order not to hinder the technological development of modern data formats. 2. Co-existence with paper invoices According to the proposal, Member States may continue to recognise paper or other documents as invoices for transactions that are not subject to intra-community reporting requirements. One foreseeable challenge for businesses and their tax advisers will therefore be handling in parallel invoices issued electronically and in paper form. While authorizing small craft businesses to continue issuing invoices in paper form would be reasonable, we fear that if the Member States grant these exceptions too generously, it could open up the possibility for systematic abuse and VAT fraud. We therefore suggest that the possibility of granting exceptions by the Member States should be limited to specific areas. 4 3.

…suggest that the possibility of granting exceptions by the Member States should be limited to specific areas. 4 3. Issuance and transmission deadlines The proposal sets up a deadline of two days after the chargeable event takes place for the issuance of invoices. From ETAF’s point of view, this deadline is way too demanding, especially for SMEs, and should be extended. Such a short unrealistic deadline would, among other things, pose difficulties in dealing with holidays and special situations such as illness. If the deadline is however to be maintained, it is necessary that Member States are not too strict in the implementation phase and do not impose sanctions. Moreover, as there is no harmonisation between EU Member States regarding when VAT arises, some guidance to determine when the deadline has to begin would be very necessary.

States regarding when VAT arises, some guidance to determine when the deadline has to begin would be very necessary. On the other hand, we find the two days’ time limit between the issuance of the invoice and the transmission of the reporting data to the national e-invoice reporting system more balanced and appropriate. Even if the transmission should usually take place in only one relatively quick step, this time limit would allow to take into account possible difficulties, such as IT disruptions or SMEs’ resource constraints. B. Scope of the reported data As of 1 January 2028, the proposal introduces quasi-real time digital reporting of transaction summary data to be consolidated at the EU level. This would only apply to B2B transactions for the moment. Consequently, companies will no longer need to report monthly through recapitulative statements as they do now.

…moment. Consequently, companies will no longer need to report monthly through recapitulative statements as they do now. Taxpayers may submit the information directly or via a third party, such as a tax advisor. Overall, we think that the replacement of the recapitulative statement by the reporting obligation will be a long-awaited and welcome change for the profession but the success of this measure will depend on the time given for preparation. To provide tax authorities with more detailed information, the Commission proposes to add a number of elements to the invoicing content standard, such as the IBAN number of the supplier's bank to which the payment of the invoice will be credited as well as the time of the payment. For data security reasons, we believe that only data that are strictly necessary for anti-fraud purposes should be transmitted.

…security reasons, we believe that only data that are strictly necessary for anti-fraud purposes should be transmitted. In this regard, ETAF members don’t see the need to transmit these new elements. C. Gradual introduction for SMEs As most of the big companies already work with e-invoicing, the impact of the reform will be rather small for them, whereas it will be very important for SMEs, especially for street traders, antique dealers, craftsmen and other businesses and sectors where digitisation has not really started or is difficult to achieve. 5 As far as the tax profession is concerned, tax advisers and accountants will gain a lot of time for their clients who can work electronically but they will need support for helping their other clients to shift towards e-invoicing. 98% of ETAF members typically provide services to SMEs.

…for helping their other clients to shift towards e-invoicing. 98% of ETAF members typically provide services to SMEs. For the above-mentioned reasons, we believe that a phased introduction for SMEs and micro- enterprises could be considered. While all businesses, regardless of their size, should be able to at least receive e-invoices, SMEs could be granted a transitional period of one year for issuing e-invoices. Such a gradual introduction would increase the acceptance of the e- invoicing system among SMEs and micro-enterprises and thus also increase the chances of a successful transition. D.

…e- invoicing system among SMEs and micro-enterprises and thus also increase the chances of a successful transition. D. Data protection warnings As information contained in invoices may reveal sensitive information, we welcome the fact that the information to be provided to the tax administration under the digital reporting requirements are an extract of the information from the invoice and not the whole invoice as such, and that it excludes the name and address of the customer from the information to be transmitted. We also support the recommendation from the European Data Protection Supervisor (EDPS) to explicitly specify in the enacting terms of the proposal that the information collected through digital reporting may only be processed for the purpose of fighting VAT fraud by the competent tax administration.

…reporting may only be processed for the purpose of fighting VAT fraud by the competent tax administration. Moreover, EU legislators have to keep in mind that, with this reform of e-invoicing rules, new market players, technical solutions and business models are expected to appear. In this new environment, commercial intermediaries with no ethical obligations could be tempted to market the financial data of companies without any control. These companies have become accustomed to offering the company's own data, both to the company itself and to the accounting firm, in return for payment. This opens the broader question of a need for regulation of these new e-invoicing players. From ETAF’s view, there might be a need for a General Data Protection Regulation for business data.

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Feedback of the European Tax Adviser Federation on the European Commission Roadmap “Conferring implementing powers on the Commission in the area of value added tax (VAT)” Ref. Ares(2020)6109955 - 29/10/2020 Introduction The European Tax Adviser Federation, ETAF, is a European umbrella organisation for more than 280.000 tax professionals from France, Germany, Italy, Belgium, Romania, Hungary and Austria. ETAF thanks the Commission for the opportunity to comment on its Roadmap “Conferring implementing powers on the Commission in the area of value added tax (VAT)”. It is worth reminding that primary responsibility for implementing EU law lies with EU countries. However, in areas where uniform conditions for implementation are needed (e.g. taxation, agriculture, the internal market, etc.), the Commission (or exceptionally the Council) adopts an implementing act.

…agriculture, the internal market, etc.), the Commission (or exceptionally the Council) adopts an implementing act. Before the Commission can adopt an implementing act, it must usually consult a committee in which every EU country is represented. In the case of the VAT Directive, Article 397 states that “The Council, acting unanimously on a proposal from the Commission, shall adopt the measures necessary to implement this Directive”. Article 398 of the VAT Directive set up the VAT Committee in order to promote the uniform application of the provisions of the VAT Directive. The VAT Committee cannot take legally binding decisions, but it can give some guidance on the application of the Directive.

VAT Committee cannot take legally binding decisions, but it can give some guidance on the application of the Directive. By means of the initiative under consideration, the European Commission has the objective of turning the VAT Committee into a “comitology committee” that would oversee the adoption of implementing acts directly proposed by the Commission. The Commission shall therefore act on the basis of the rules of the Comitology Regulation (Regulation (EU) No 182/2011). Feedback The European Tax Adviser Federation welcomes the project of the European Commission to turn the VAT Committee into a “comitology committee” that would oversee the adoption of implementing acts by the Commission.

…the VAT Committee into a “comitology committee” that would oversee the adoption of implementing acts by the Commission. In particular, ETAF recognizes that conferring additional implementing powers to the Commission in the area of VAT might have a positive impact in terms of harmonization of technical measures that are otherwise implemented heterogeneously at national level. Since the Comitology procedure includes the supervision of national experts within the comitology committee that would vote on the implementing acts proposed by the Commission, ETAF believes that the national sovereignty of the Member States would not be compromised. Quite the opposite, a comitology committee on VAT means that national experts of the Member States would have the possibility to discuss and approve VAT implementing measures for the benefit of their respective countries and the EU as a whole.

…to discuss and approve VAT implementing measures for the benefit of their respective countries and the EU as a whole. A way to simplify the decision-making process Nowadays the Commission has no implementing powers with respect to the VAT Directive. The only existing tool for the Commission to promote a consistent implementation of VAT rules is the VAT Committee, which is just an advisory Committee set up by the VAT Directive which drafts non-binding guidance for the EU Member States. ETAF believes that by turning the VAT Committee into a comitology committee, the implementing measures proposed by the European Commission would be more harmonized and coherent. That is so because the representatives of the Member States in this new and empowered “VAT Committee” would have the responsibility to agree on technical VAT measures that have a direct implementation at national level.

…would have the responsibility to agree on technical VAT measures that have a direct implementation at national level. The possibility to provide the European Commission with implementing powers has another advantage, namely avoiding infringement procedures against Member States. Infringement procedures are very heavy and time-consuming due to all the steps and time constraints they entail (letter of formal notice, reasoned opinion, referral to the Court, etc.) and it can take years to have a tangible solution. Therefore, it would be much more efficient to confer the Commission with implementing powers beforehand by changing the status of the VAT Committee to a comitology committee and thus be able to speed things up and guarantee a harmonized implementation of EU legislation a priori.

…committee and thus be able to speed things up and guarantee a harmonized implementation of EU legislation a priori. As practitioners who work on a daily basis with the provisions of the VAT Directive, it is in our interest to have a uniform and harmonized interpretation thereof. Thus, we can be certain that the way of understanding and implementing the rules within the Member State we operate is correct. Clarity on the interpretation and application of these rules among Member States is a great advantage for taxpayers, tax administrations and tax advisers. How to keep the balance between the Commission and the Member States The possibility to empower the European Commission to adopt certain implementing acts should be counterbalanced by a proper control by the Member States over those acts.

…to adopt certain implementing acts should be counterbalanced by a proper control by the Member States over those acts. The procedure to approve an implementing act and the voting system laid down by the Comitology Regulation (Regulation (EU) No 182/2011) would ensure such balance. When the Commission proposes an implementing act (based on article 290 TFEU) in the area of taxation, it triggers the so-called “examination procedure”. The Commission submits the draft of the implementing act to the comitology committee for the representatives to deliver an opinion on it. The opinion is voted by qualified majority. If the opinion is in favor to the proposed act, the Commission must adopt it. On the other hand, if the opinion is against the proposed act, the Commission cannot adopt it.

…must adopt it. On the other hand, if the opinion is against the proposed act, the Commission cannot adopt it. Where no opinion is delivered, the Commission can either adopt it or submit a new, amended version, unless the proposed act concerns taxation (or other fields such as financial services, the protection of the health, etc). Therefore, in the case of implementing acts concerning VAT, only a positive opinion would allow the Commission to adopt the implementing measure. The system described above ensures that the implementing measures proposed by the Commission are only adopted if a large majority of representatives of the Member States is in favor. Therefore, this system would balance the stronger implementing power of the Commission while ensuring a democratic control by EU Member States.

…balance the stronger implementing power of the Commission while ensuring a democratic control by EU Member States. The possible active role of the VAT Expert Group As we highlighted above, the implementation of an easier way for the Commission to streamline the content of the VAT policy throughout the EU should bring positive impacts in terms of coherence of the VAT system within the Union. The role that national experts would play in the comitology committee is in this sense paramount. However, ETAF believes that the very impact of the implementing acts on taxpayers could be even better addressed by the Commission. ETAF suggests to introduce an advisory role of the VAT Expert Group within this process.

…addressed by the Commission. ETAF suggests to introduce an advisory role of the VAT Expert Group within this process. As it stands today, the VAT Expert Group includes representatives of businesses, professionals and academics who assist and advise the European Commission on VAT matters by bringing the point of view of the real economic system. ETAF believes that the provision of non-binding opinions by the VAT Expert Group on the implementing measures to be proposed by the Commission to the VAT Committee would help the VAT Committee itself in estimating the real effects of such measures on the day-to-day activity of the economic operators that would have to comply with them.

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