It is a transitional 25-year regime that will soon give way to measures significantly changing the rules on VAT. On 25 May 2018, the Commission proposed technical amendments to complement the recent reform proposal aimed at making the VAT system in the EU more resistant to fraud.
The establishment of the single online portal “OSS”:
The establishment of a definitive system requires a discussion between the Member States, which will have to conclude with important amendments to the VAT Directive, and around 200 of the 408 articles in the VAT Directive should be adapted.
Cross-border trade in goods will be considered as a ‘single taxable transaction’ which will ensure the taxation of goods in the Member State in which the transport of goods ends.
Changes related to the implementation of the single online portal “OSS”:
In order to complete the VAT formalities for all BtoB operators, the amendments propose to introduce the necessary measures to set up a single online portal. Companies located outside the European Union wishing to sell to other companies within the EU will also be able to benefit from this system, which would then no longer have to register for VAT purposes in each Member State. However, entities outside the EU will have to designate an EU intermediary to handle VAT formalities.
The invoicing established by the seller must mention the VAT due on a sale of goods to his customer located in another EU country, at the rate applicable in the Member State of destination.
It is then the purchaser of the goods who will be liable for VAT only when the customer is a certified taxable person, as a reliable taxable person, recognized as such by the tax authorities.
One certainty remains with this ambitious reform, it may be a hard turn for businesses to rethink their billing process.
ASD Group offers its management service dedicated to VAT in the EU. You can contact us if you are subject to VAT and you need help with your administrative procedures.