The digital age poses new challenges for the VAT system. The EU Commission has therefore made proposals to adapt the current system. The EU Parliament gave its opinion on this on November 22.

Three proposals have been submitted to Parliament. The first concerns the renewal of the VAT system directive. The Parliament supports the proposal but is in favor of a longer transitional period until the new regulations are applied.

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The Commission’s second proposal relates to tax relief for distance selling of imported goods. This was adopted by Parliament. A third report deals with the fight against VAT fraud. The proposal is to better curb fraud through improved cooperation between the European Public Prosecutor’s Office (EPPO), EUROPOL, EUROFISC and EUROJUST. Parliament agrees to this.

Background and objective

The number of digital business models is increasing, while digital data cannot be fully utilized. There are also loopholes that enable VAT fraud. The above-mentioned measures are intended to close these gaps and eliminate distortions of competition.

The proposed regulations are to enter into force gradually between January 2024 and January 2028.

Source: DIHK (German), European Parliament