Changes to VAT resulting from the "VAT in the digital age" package

The agreement covers three pieces of legislation – a directive, a regulation and an implementing regulation – which together bring changes in the following areas:

Digital VAT reporting in (near) real time, based on e-invoicing

Businesses will be obliged to issue electronic invoices for cross-border B2B transactions and automatically report the data to the tax administration. The new rules should thus replace the obligation to submit recapitulative statements (EU Sales Lists). EU Member States have the option to extend these obligations to domestic transactions. This system will build on the existing European standard for e-invoicing in public procurement and should be made mandatory in the course of 2030. All existing national systems should be interoperable with the EU system by 2035. In Slovakia, implementation is not expected to take place before 2027.

A 'deemed supplier' model for the platform economy

Under the new rules, platform economy operators in the passenger transport and short-term accommodation rental sectors will be responsible for collecting and remitting VAT in cases where the original service provider does not charge VAT. The platform will collect VAT directly from the customer and remit it to the tax authorities. This measure aims to ensure a more balanced competitive environment between traditional and digital services and to increase VAT collection in the sector concerned.

EU Member States can start applying the scheme from 1 July 2028, with mandatory implementation expected from the beginning of 2030.

Extension of the one-stop shop (“OSS”) system for VAT, changes to the “e-commerce package”

The One Stop Shop ("OSS") system allows businesses to declare and remit VAT on their sales of goods and services to consumers by registering in one EU Member State instead of having to register in each EU Member State where the goods or services are supplied.

The scope of the scheme will be extended to other types of transactions, including sales of electricity, gas, heat and cooling to consumers taking place in another EU Member State.

It will also cover situations where businesses move their own stock of goods to another EU Member State for subsequent sale to consumers. It will therefore no longer be limited to cross-border supplies. The "call-off stock” simplification arrangement is also expected to end.

The package will bring further adjustments to the cross-border e-commerce VAT rules which became effective on 1 July 2021.

Mandatory reverse charge mechanism will be introduced, under conditions, to domestic supplies of goods and services where the supplier is not established in the EU Member State in which VAT is due.

The individual changes will be implemented in the time period of 2027 – 2028.

Following the re-consultation with the European Parliament and formal adoption by the Council, the entry into force of these measures is subject to publication in the Official Journal of the European Union.

The extent of the changes will require time for thorough preparation. We remain available to assist you with assessment of the impact of these changes on your business transactions and business processes.