There is a lurking issue in many real-time reporting systems that depend on either trusted parties or trusting the government with all the invoice data. We believe neither approach is ideal, so we came up with a better alternative. We developed a tool that can automatically audit all e-Invoice extractions and conversions, and attach a cryptographic signature to the extraction. This signature is then sent either to the Tax Administration or any other system managing the real-time reporting.

During the IDSt event in Berlin on the 16th of November, Agustín Míguez Pérez presented the potential directive which is a result of the “VAT in the Digital Age” Initiative. It was meant to be the official presentation but unfortunately due to political circumstances it had to be postponed to next month. Although he could not share everything with us, he was kind enough to give us a good overview of what might come.

Introduction At the beginning of May the Group on the Future of VAT (GFV) gathered to discuss e-invoicing in respect to the VAT in the Digital Age project.[1] In a recent blog post we have already shown how complex this topic is. This also becomes apparent from the minutes of the GFVs meeting, which show the many questions raised by the European Commission (EC) to the delegates. In the following we hope to add to the ongoing discussion by providing our view on the questions raised and the answers provided by the delegates.

Introduction France, Italy, Poland. What do these countries have in common? First of all, they are all members of the EU. And second, among many other similarities, they all requested and obtained a derogation to articles 218 and 232 of the 2006 EU VAT directive in order to be able to implement mandatory e-invoicing. In this blogpost, we want to discuss how the EU derogation system works and why it is so important.

Introduction Recently the European Parliament called on the Commission “to stand for the expansion of e-invoicing and calls for the introduction of an EU e-invoicing standard [sic] harmonising”.[1] This idea seems to be supported by many EU Member States and also private organisations. But what does this need for harmonisation mean exactly? Isn’t there already the pan-European e-invoicing standard EN 16931? In the following we will try to answer these questions.

Introduction Recently we discussed the outcome of the Group of the Future of VAT (GFV) meeting regarding Digital Reporting Requirements (DRR), such as real-time reporting. During the GFV meeting it was concluded that an EU DRR is the most feasible option in order to finally tackle the €134 billion VAT gap. However, several questions posed by the European Commission (EC) were unanswered during the meeting. In the following we will try to address these questions and hope that our view can add to the discussion.

Introduction With an increasing number of EU Member States considering the implementation of real-time reporting, the European Commission is doing everything they can to harmonise this process as much as possible. Discussions between Member States and the EC are ongoing and a recently published summary of the meeting of the Group of the Future of VAT (GFV) in November provides a clear overview of the options that are now on the table.

Introduction As the European Commission is preparing its legislative proposal under the heading of “VAT in the Digital Age” for Q3 2022, we believe it might be a good time to share the advice experts provided to the European Commission throughout our VAT Talks series. We are very thankful that so many experts shared their views on VAT with us. This resulted in advice regarding the use of technology, the need to focus on harmonisation and simplification, and the importance of a continuous dialogue with the business community.

Introduction Recently the European Parliament published an excellent report discussing how to improve the exchange of information and compliance to reduce the VAT gap. In the following we will provide an overview of the main findings and analyse the conclusions made in the report. We’ll start by discussing the size of the current VAT gap and the amount of VAT fraud committed on an annual basis. At least €50 billion in VAT fraud every year The report rightfully states that it’s difficult to estimate the VAT gap “as by definition it involves the estimation of unobserved variables, such as the compliance rate.

Introduction It’s an exciting period for everyone who follows VAT news. Various countries are implementing a VAT system, others are introducing carbon taxes, while recently the e-commerce legislation in the EU went into force. All extremely interesting topics, but the most exciting of them all is the surge of real-time reporting! Multiple countries all over the world are currently in the process of implementing some variant of this tool to tackle VAT fraud.