Institute of Chartered Accountants in England and Wales

ICAEW Chartered Accountants’ Hall Moorgate Place London EC2R 6EA UK icaew.com The Institute of Chartered Accountants in England and Wales (ICAEW) incorporated by Royal Charter (RC000246) Registered office: Chartered Accountants’ Hall Moorgate Place London EC2R 6EA UK ICAEW REPRESENTATION 28/23 VAT IN THE DIGITAL AGE Issued 30 March 2023 ICAEW welcomes the opportunity to comment on the VAT in the Digital Age proposals published by the European Commission on 8 December 2022, a copy of which is available from this link. ICAEW is listed in the EU Transparency Register (ID number: 7719382720-34). For questions on this representation please contact our Tax Faculty team at [email protected] quoting REP 28/23. This response of 27 March 2023 has been prepared by the ICAEW Tax Faculty.

…team at [email protected] quoting REP 28/23. This response of 27 March 2023 has been prepared by the ICAEW Tax Faculty. Internationally recognised as a source of expertise, the ICAEW Tax Faculty is a leading authority on taxation and is the voice of tax for ICAEW. It is responsible for making all submissions to tax authorities on behalf of ICAEW, drawing upon the knowledge and experience of ICAEW’s membership. The Tax Faculty’s work is directly supported by over 130 active members, many of them well-known names in the tax world, who work across the complete spectrum of tax, both in practice and in business. ICAEW Tax Faculty’s Ten Tenets for a Better Tax System, by which we benchmark the tax system and changes to it, are summarised in Appendix 1.

Tenets for a Better Tax System, by which we benchmark the tax system and changes to it, are summarised in Appendix 1. ICAEW has had a presence in Brussels since 1994, providing technical advice across a broad range of EU regulatory matters and facilitating dialogue among stakeholders on key public policy issues. Headquartered in Brussels, the ICAEW Europe Region engages with professional bodies, firms, oversight authorities and market participants across Europe and approximately 5,000 ICAEW members in EU member states outside the UK. ICAEW is a world-leading professional body established under a Royal Charter to serve the public interest. In pursuit of its vision of a world of sustainable economies, ICAEW works with governments, regulators and businesses and it leads, connects, supports and regulates more than 165,000 chartered accountant members in over 147 countries.

…and it leads, connects, supports and regulates more than 165,000 chartered accountant members in over 147 countries. ICAEW members work in all types of private and public organisations, including public practice firms, and are trained to provide clarity and rigour and apply the highest professional, technical and ethical standards. © ICAEW 2023 All rights reserved. This document may be reproduced without specific permission, in whole or part, free of charge and in any format or medium, subject to the conditions that: • it is appropriately attributed, replicated accurately and is not used in a misleading context; • the source of the extract or document is acknowledged and the title and ICAEW reference number are quoted. Where third-party copyright material has been identified application for permission must be made to the copyright holder. Ref.

…copyright material has been identified application for permission must be made to the copyright holder. Ref. Ares(2023)2315146 - 30/03/2023 ICAEW REPRESENTATION 28/23 VAT IN THE DIGITAL AGE © ICAEW 2023 2 REPRESENTATION 1. Thank you for this opportunity to provide comments on the Commission’s proposals for a directive, a regulation and an implementing regulation with respect to the introduction of the Commission’s proposals on ‘VAT in the Digital Age’, which will cover: a) VAT reporting obligations and e-invoicing b) VAT treatment of the platform economy c) Single (place of) EU VAT registration. VAT reporting obligations and e-invoicing

…treatment of the platform economy c) Single (place of) EU VAT registration. VAT reporting obligations and e-invoicing 2. A number of our members, operating through affiliates in the EU, have expressed concern as to the costs involved in moving from a Member State’s existing e-invoicing obligations or Digital Reporting Requirements (DRR) (some of which are only now being introduced, eg France, Germany, Belgium) to the new EU wide system. For the EU wide system to be effective and to achieve the goal of substantially reducing levels of VAT fraud, our members have suggested that the lead-time for the convergence of national systems to the EU system should be extended beyond 2028.

…suggested that the lead-time for the convergence of national systems to the EU system should be extended beyond 2028. 3. The EU system will not, we understand, have a pre-clearance function built in, which is likely to lead to disputes with customers not accepting electronic invoices, or only processing them after a significant delay. With pre-clearance through the Member State of despatch, ie establishment or registration national system, together with the Member State of arrival’s system, this could ensure lower rejection rates and improved acceptance of electronic invoices, reducing potentially onerous levels of manual reconciliations.

…rates and improved acceptance of electronic invoices, reducing potentially onerous levels of manual reconciliations. 4. The proposals contain a provision to remove the ability to issue summary invoices for any type of supply, goods/services and for both domestic and intra-EU. This provision (the removal of summary invoices) is likely to cause difficulty where there are multiple operations between the same supplier and customer each period – each operation being required to be invoiced separately and the invoice issued (for intra-EU supplies) within two days of the supply taking place. We recommend retaining the option to use summary invoicing for ‘domestic’ supplies where VAT is charged (ie excluding transactions falling within the scope of article 194)? VAT treatment of the platform economy Definition of Platform

…transactions falling within the scope of article 194)? VAT treatment of the platform economy Definition of Platform 5. Currently, there is no definition of ‘platform’. The draft legislation (article 28a in the Directive) merely refers to an ‘electronic interface such as a platform, portal or similar means’. 6. To ensure the legislative proposals provide certainty to businesses, we would recommend that the definition of a ‘platform facilitating’ a supply within the scope of article 28a is further tightened within the Implementing Regulation article 9a. Interaction with Tour Operators’ Margin Scheme 7. The proposals confirm that platforms making a deemed supply under the new rules will not be allowed to account for VAT within the Tour Operators’ Margin Scheme (TOMS).

…supply under the new rules will not be allowed to account for VAT within the Tour Operators’ Margin Scheme (TOMS). 8. However, at present, based on CJEU case law, a platform, which deals with customers in its own name, making a supply of short-term accommodation rental or passenger transport, may fall within TOMS. 9. If this difference remains, it could create an incentive for a platform to change its business model to be deemed to be acting in its own name (and falling outside any of the provisions of the proposed Article 9b.1 of the Implementing Regulation) when acting in relation to, for example, an underlying supplier applying the special scheme for small enterprises. In this case, VAT would only be due on the platform’s margin in its Member state of establishment. ICAEW REPRESENTATION 28/23 VAT IN THE DIGITAL AGE © ICAEW 2023 3 Underlying Supplier

…its Member state of establishment. ICAEW REPRESENTATION 28/23 VAT IN THE DIGITAL AGE © ICAEW 2023 3 Underlying Supplier 10. Under the proposals, the platform will be deemed to supply the underlying service, and therefore be responsible for the payment of VAT, when: a) it facilitates a supply of short-term accommodation rental or passenger transport; and b) the underlying service provider falls within one of the categories of business set out in article 28a. 11. Our understanding is that this is intended to make platforms liable where the underlying supplier is genuinely not liable to pay VAT under local legislation.

…to make platforms liable where the underlying supplier is genuinely not liable to pay VAT under local legislation. 12. Do the proposals also make the platform liable where the underlying supplier is liable to pay VAT but non-compliant and does not provide a valid VAT number to the platform (see article 9c of the Implementing Regulations)? If so, should the liability to account for the VAT due remain with the underlying supplier in this case and not with the platform?

20 → 12

originalus šaltinis (PDF) ↗