On February 16, 2022, the European Parliament voted in favor of pan-European harmonization of e-invoicing and adopting the final reform of the VAT system to:

• facilitate cross-border interoperability;
• ensure legal compliance,
• increase the transparency of commercial transactions; and
• reduce fraud and errors;

Parliament acknowledges that Member States are already adopting various forms of e-invoicing and live reporting. But it should be coordinated to promote ease of adoption by firms and efficient tax data exchange. Each parliamentary vote is not binding on the EU Member States.

Parliament reaffirmed its support for reforms of the current “provisional” origin-based VAT rules for B2B goods transactions. This was perfect for tax frauds using a zero intra-community supply process to collect billions of VAT. And it creates complexity and costs for law-abiding companies. The proposed target VAT system for 2018 proposes a transition to a destination-based model, supported by easier ways of reporting and paying this VAT. However, many Member States have reservations about a proposal that is effectively blocked.

Proposed EU requirements for digital reporting

EU VAT reforms in the digital age include a channel for harmonized digital reporting requirements (DRR) and continuous transaction control (CTC).

This was due to the proposed EU tax action plan for 2020  on a fairer and more efficient EU tax system.

Europe e-invoicing and live reporting