The European Commission’s VAT proposals can be divided into three main areas:
ViDA can be divided in the three main areas:
- Digital reporting (DRR) based on e-invoicing
- A single VAT registration: an extension of OSS
- New VAT rules for platform economy and e-commerce
Following our preceding articles, including our general article about ViDA, this last article in the series about the VIDA proposals gives an overview of the proposed changes in the area of the extension of the OSS and briefly comments on their impact on businesses. More details about other areas can be found by clicking on the relevant link above.
The single VAT registration – extension of OSS - measures apply from 1 July 2027 / 1 July 2028 and aim decreasing the need for multiple VAT registrations by expanding the OSS and the mandatory reverse charge. A broader range of goods could be reported through OSS, including the movement of a business’s own stock.
Extension of OSS to all types of B2C and to some B2B supplies
The OSS scheme currently provides a business selling goods B2C in other Member States (MSs) as well as a marketplace collecting VAT as the deemed supplier to fulfil their VAT compliance obligations via a single online portal. Several cross-border B2C services provided across the EU can also be reported via the OSS.
The OSS will be extended to supplies of gas, electricity, heating and cooling types of supplies from 1 July 2027.
From 1 July 2028, the scope of the OSS will be extended to cover all B2C services which are provided in the MSs where businesses are not established. The scope of the non-union OSS will cover all B2C services, and not only supplies of services to EU-established customers.
The scope of the Union OSS scheme will be expanded to cover domestic B2C supplies of goods by businesses who are not registered for VAT in the Member State (MS) of consumption.
New special scheme for transfers of own goods
From 2025, stock transfers could be reported in a Union OSS return. Businesses transferring stock between EU MSs could report those movement of own goods in their MS of identification. This would be the MS of establishment for EU businesses and the MS of departure of the goods for non-EU businesses.
Call-off stocks arrangements currently falling under EU simplification measure, could also be reported through the Union OSS return.
The EU call-off stock simplification will be phased out
Beyond 30 June 2028, no new transfers of stock under the EU call-off stock arrangements can be effected. For call-off stock arrangements commencing on or before 30 June 2028, the relevant conditions, including the 12-month time limit for transferring ownership of those goods to the intended purchaser, should continue to apply. The simplification will cease to apply with effect from 30 June 2029 since the simplification will no longer be required after that date, because those movements of goods can be reported via the Union OSS for transfers of own goods.
Extended domestic reverse charge
From 2025, the domestic reverse charge will apply for all B2B supplies of goods and services made by non-established and non-VAT-registered businesses if the recipient of the goods or the services is registered for VAT in the MS in which the VAT is due. It moves the burden of VAT payment to the buyer rather than the seller, meaning that the overseas seller does not need to register for VAT in the EU MS it is supplying to if the buyer is VAT registered in this MS.
Furthermore, MSs are allowed to apply the mandatory reverse charge to all situations where the supplier is not established in the MS where the supply takes place for VAT purposes.
Currently, the domestic reverse charge is an optional provision included in Article 194 of the EU VAT Directive. It applies to B2B sales where the supplier is not established in the MS in which the VAT is due.
In the Netherlands, the domestic reverse charge already applies to all local supplies of goods and services by non-established businesses if the recipient of the goods or receiver of the services is established in the Netherlands. If the EU proposal will be adopted, then this means that the scope of the reverse charge will be further extended to supplies to all VAT registered businesses. Furthermore, the ViDA package provides that the Netherlands could continue to apply the reverse charge to all supplies by non-established businesses not only if these businesses are not VAT registered in the Netherlands.
Suppliers need to report the transactions subject to the extended mandatory domestic reverse charge in the ESL from 1 July 2028, and in the EU DRR (e-invoicing and digital transaction-based reporting), from 1 July 2030. The acquirer of the goods or services also needs to report the purchases in the EU DRR from 1 July 2030.
Comments
These changes, i.e. the extended scope of the OSS, the special scheme for transfers of own goods and the extended scope of application of the domestic reverse charge, will reduce the VAT compliance costs for businesses and will therefore be expected to be welcomed by businesses. However, from 1 July 2030, the changes will be accompanied by increased obligations of (digital) reporting and e-invoicing which will generate costs for taxpayers; however the decreased fragmentation in the compliance requirements and complementary measures (e.g. the pre-filling of the VAT return and removal of other compliance obligations) can hopefully generate savings which would compensate for the new burdens.
