VAT in the Digital Age: EU Commission publishes draft Directive

The VAT Directive must be adapted to the digital transformation of economic activities – the EU Commission has been working on this for a long time. On 8 December 2022, it presented a draft for an amended Directive that is intended to completely digitalise the VAT invoicing and reporting obligations, expand the previous regulations for the platform economy and avoid VAT registrations in other EU countries. Here, we present only the most important innovations. The proposed Directive will result in additional changes not outlined here.

Electronic platforms

For cases in which operators of electronic platforms support certain supplies of goods with a third-country connection to non-taxable persons and certain equals, there has existed a fictitious chain supply since 1 July 2021. The seller hereby supplies the goods to the platform operator and the platform operator, in turn, supplies the customer. The plan is to extend this principle, beginning in 2025, to also cover all supplies of goods within the EU via platforms, i.e., also to supplies to taxable persons. The supply of the seller to the platform operator is hereby VAT-exempt, and the supply of the platform operator to the customer is taxed according to the general rules. The supply fiction also applies if a platform supports an intra-Community transfer of own goods (exception: capital goods); this transaction is treated as if the transferring trader had supplied the goods to the platform operator and then reacquired them from the platform operator.

Purely local situations are not covered, such as those where the platform operator is established in only one EU Member State and only supports supplies of goods within that Member State.

This model will also be applied to short-term accommodation rental and passenger transport offered by private individuals/small businesses (and some others) via platforms from 2025 onward. As these players have not been required to pay VAT so far, this has given them an unjustified competitive advantage over hotels and taxi companies.  The new regulation works on the assumption that there is a fictitious VAT-exempt service from the landlord/driver to the platform operator and a fictitious service subject to standard taxation from the platform operator to the customer. Large platforms will not fall under the special regime for small businesses, so that the service will be subject to VAT.

The EU Commission's draft also negates the platform operator’s very strict liability for the seller's tax liability according to § 25e UStG (German VAT Code), even for the cases now covered, as the seller's supply will in future generally be VAT-exempt and any VAT arising will be incurred at the level of the platform operator itself.


As early as 2024, electronic invoices are to be standardised. If an invoice is issued electronically, which is initially still voluntary, it must be issued and transmitted in a structured electronic format that enables it to be processed automatically and electronically. From 2028 onward, e-invoicing will then be mandatory for all EU Member States. EU Member States may then only accept paper invoices for transactions that are not subject to the new e-filing (see below). Neither the invoice recipient nor (as is required in some EU Member States) the tax office will have to agree to e-invoicing in the future.

From 2028 onward, the deadline for issuing invoices for intra-Community supplies and for supplies that are subject to the reverse charge procedure is only two working days from the time of performance. Accordingly, collective invoices may no longer be issued for a calendar month.

From 2028 onward, the invoice must also contain additional information such as:

  • The bank account to which the payment for the invoice is to be credited
  • The agreed date and amounts of each payment in relation to a specific transaction  
  • For amended invoices: the identification of the original invoice

e-Filing – digital reporting obligations and VAT

The invoicing and reporting system of the future is digital and transaction-based. The EC sales lists are thus passé.  What some EU Member States, especially Eastern European ones, have already introduced (continuous transaction controls) is to be extended to the whole EU, because these measures have proven to be an effective means of reducing the "VAT Gap" (VAT fraud). 

From 2028 onward, Intra-Community transactions that were previously recorded via the EC sales lists, which are considered outdated, must be declared in a DRP system (DRP stands for Digital Reporting Requirements). The declaration will then no longer be cumulative per VAT ID and month, but transaction-based. The data must be transmitted within two working days after the invoice was issued or the day on which the invoice should have been issued.

All (new) mandatory details of the invoice must be reported, except for the name and address of the supplier and the recipient of the supply (both are derived from the VAT ID to be provided) and the date of the service or payment.

Single VAT registration

The well-known reverse charge procedure has long relieved taxable persons who provide supplies in other EU countries. However, there are currently still many cases in which the reverse charge does not apply, and this is also still dependent on the respective Member State due to the lack of uniform implementation in national law. In the B2B area, the reverse charge procedure is to be extended from 2025 onward to all supplies by a taxable person not established in the Member State concerned (exception: margin taxation), if the recipient of the supply is registered there. The simplification rule for consignment stocks, which was only introduced in 2020 and was intended to avoid registrations abroad, will then no longer be necessary and will only apply to transfers to a consignment warehouse until 31 December 2024.

The EU One-Stop Shop rule is extended to all supplies of goods, i.e. also to supplies of works, goods on board ships, aircraft or trains as well as gas, electricity, heating and cooling.

In the case of intra-Community transfers of own goods, the intra-Community acquisition is VAT-exempt in the destination Member State if the trader participates in a special procedure, from which, however, capital goods are excluded. The transfer itself still has to be declared, but now via a kind of One-Stop Shop procedure in a single Member State. 

Dated: 20 January 2023