Yesterday, Patrice Pillet of the EU commission provided an update on the progress of ongoing council discussions on the VAT in the Digital Age (ViDA) package, and amendments which are being made to the original ViDA proposal.

Concerning the ‘E-invoicing & Digital reporting’ pillar; it was strongly indicated that pre-clearance of the e-invoice will be central to the mandatory e-invoicing & digital reporting system which will be introduced for intra-Community Transactions. This is in contrast to the original text, which specifically excluded this possibility.

The pre-clearance of the invoice would be performed either by the Tax Authority, an accredited 3rd party, or perhaps even by accredited software, prior to the invoice being transmitted to the customer – though not involving a centralised clearance & delivery of the invoice by the Tax Authorities.

The goal of using pre-clearance is to facilitate the digital reporting of the invoicing data, with immediate invoice reporting via the issuance of the invoice, as opposed to having a separate real-time intra-Community reporting submission for businesses to comply with (running counter the principles of the overall proposal to reduce compliance for businesses trading in the EU).

Ultimately, the above methodology should also apply to domestic real-time reporting systems which are optionally introduced by each EU member state as part of the EU’s plan to harmonise these systems across the EU – however the commission confirmed that many EU member states have raised concerns here, and it remains to be seen whether the proposed requirements to harmonise domestic digital reporting systems will survive as part of the approved text.

If you have any questions on the impact of ViDA on your business, please contact us here.