At the Economic and Financial Affairs Council (ECOFIN) meeting on 8 November, European finance ministers reached political agreement on new anti-fraud rules for record-keeping by payment service providers and simplified VAT rules for SMEs trading across borders. The Council also reached provisional agreement on exemption from VAT and excise duty for supplies to armed forces deployed within the EU framework and the recast directive on general arrangements for excise duty.
The new rules require payment service providers to keep records of their e-commerce transactions, which will be stored in a new central electronic system and shared between EU tax administrations and law enforcement bodies. These new rules are introduced by amendments to:
the VAT directive, requiring payment service providers to keep records of cross-border payments related to e-commerce for a period of three years; and
the administrative cooperation regulation in the field of VAT, setting out details of how national tax authorities will share and use this information, to be held in a new ‘central electronic system of payment information’ (CESOP) for a period of five years.
It is proposed that these rules will enter into force in January 2024, after confirmation by the European Parliament.
ECOFIN also reached political agreement on a simplified VAT regime for SMEs, which will ensure that the domestic registration threshold in individual member states cannot exceed €85,000 and allow businesses established in other member states who make cross-border supplies to benefit from that threshold and other simplifications where their EU-wide annual turnover does not exceed €100,000. This is introduced by amendments to:
the VAT directive, enabling SMEs to use the VAT exemption across the EU; and
the administrative cooperation regulation in the field of VAT, setting out information-sharing arrangements between tax authorities for application of the updated rules.
The simplified VAT regime for SMEs is intended to enter into force in January 2025.
In addition, the Council reached provisional agreement on:
Commission proposals for a VAT directive amendment providing exemption from VAT and excise duty for supplies to armed forces deployed under the EU common security and defence policy from July 2022; and
a recast directive on general arrangements for excise duty and amended regulation on administrative cooperation on the content of electronic registers from February 2023.
At the Economic and Financial Affairs Council (ECOFIN) meeting on 8 November, European finance ministers reached political agreement on new anti-fraud rules for record-keeping by payment service providers and simplified VAT rules for SMEs trading across borders. The Council also reached provisional agreement on exemption from VAT and excise duty for supplies to armed forces deployed within the EU framework and the recast directive on general arrangements for excise duty.
The new rules require payment service providers to keep records of their e-commerce transactions, which will be stored in a new central electronic system and shared between EU tax administrations and law enforcement bodies. These new rules are introduced by amendments to:
the VAT directive, requiring payment service providers to keep records of cross-border payments related to e-commerce for a period of three years; and
the administrative cooperation regulation in the field of VAT, setting out details of how national tax authorities will share and use this information, to be held in a new ‘central electronic system of payment information’ (CESOP) for a period of five years.
It is proposed that these rules will enter into force in January 2024, after confirmation by the European Parliament.
ECOFIN also reached political agreement on a simplified VAT regime for SMEs, which will ensure that the domestic registration threshold in individual member states cannot exceed €85,000 and allow businesses established in other member states who make cross-border supplies to benefit from that threshold and other simplifications where their EU-wide annual turnover does not exceed €100,000. This is introduced by amendments to:
the VAT directive, enabling SMEs to use the VAT exemption across the EU; and
the administrative cooperation regulation in the field of VAT, setting out information-sharing arrangements between tax authorities for application of the updated rules.
The simplified VAT regime for SMEs is intended to enter into force in January 2025.
In addition, the Council reached provisional agreement on:
Commission proposals for a VAT directive amendment providing exemption from VAT and excise duty for supplies to armed forces deployed under the EU common security and defence policy from July 2022; and
a recast directive on general arrangements for excise duty and amended regulation on administrative cooperation on the content of electronic registers from February 2023.
