Where does the process stand now?

The ViDA package, aimed at modernising the EU’s VAT system and cutting VAT fraud, was proposed almost two years ago and presented to the Parliament by the European Commission last November. On 24 July 2024 the European Parliament published its legislative opinion, approving the Commission’s proposals with a few amendments. If the Commission agrees with the amendments and makes no further changes, it will forward its position to the European Council and the national parliaments.

The Parliament’s proposals contain minor additions and clarifications to the ViDA package, mainly concerning data security and the handling of personal data. For example, under the proposed amendments, the data collected by the new systems can only be stored within the EU, and the data reporting requirements do not apply to defence and national security contracts. The processing of and access to data on private purchases would also be restricted to protect privacy.

Main objectives of ViDA package

In our previous article we covered the three main objectives of the ViDA package:

• the introduction of digital reporting, mandatory e-invoicing for cross-border transactions;
• updated VAT rules to meet the challenges of the platform economy;
• the introduction of single VAT registration.

Below are some of the other new features expected in relation to the three objectives.

Digital data reporting

The recapitulative statement will be replaced by digital reporting, as this must be forwarded for each transaction carried out by the taxpayer no later than three working days from the posting date in their accounts or from the date on which the invoice should have been issued. So there is now no need for the recapitulative statement.

Member States may allow the issue of e-invoices in other formats in accordance with the Directive, but each Member State must also adopt the single European standard as well. They may require that electronic invoices be issued for domestic transactions too.

The provisions of the ViDA package for digital reporting are expected to apply from the beginning of 2028, and be implemented into national law by the end of 2027.

Single VAT registration

The single VAT registration aims to reduce administrative burdens and eliminate registration obligations between Member States. To this end, the ViDA package removes the call-off stock simplification, which until now allowed a seller established in another Member State to hold call-off stock in Hungary without registering. However, removing the simplification does not mean the permanent abolition of this option, since by extending and amending two existing regulations, the same scheme can still be set up, avoiding the registration obligation.

An existing option would be made compulsory by an amendment to the ViDA package, according to which if a taxpayer without a VAT identification number in the Member State where the VAT is payable supplies a taxable person who has a VAT identification number in that Member State, then it is compulsory to apply the reverse charge mechanism. In other words, for a reverse-charge purchase in Hungary, the buyer would pay the tax instead of the seller, so this system ensures that the supplier does not have to register in the Member State if they don’t have a tax number there. Of course, the taxpayer can still choose to register in that Member State. Since this type of reverse-charge purchase had to be reported in the recapitulative statement so far, the purchaser will soon have to provide such information in the form of digital reporting.

One-stop shop system

The ViDA package expands the one-stop shop system to the transfer of own products to another state. Goods transferred in this way are considered to be tax-exempt acquisitions in the destination Member State. Taxpayers must register in the Member State where they are established, and report any changes to such activities, for instance the start and end of activities. The unique VAT identification numbers previously issued must be used, and VAT returns submitted electronically every month in the Member State that issued the number.

With the extension of the one-stop shop system and the application of reverse charging in Hungary, taxpayers who previously used call-off stock will still be able to avoid registration in the country of destination. The new system could also benefit products with a longer rotation period, as there is no 12-month deadline on sales.

The phasing out of call-off stock is expected to be one of the first steps, with Member States adopting and publishing the laws, regulations and administrative provisions necessary to abolish the call-off stock rules by 31 December 2024 at the latest.

The VAT experts at WTS Klient Hungary with their decades of professional experience can effectively support their clients not only with Hungarian but also international VAT regulation. Do not hesitate to contact us if your company is involved in international, intra-EU transactions, and you have questions about what changes you need to prepare for under the new rules.

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Implementation of EU directive in the VAT Act of the Czech Republic

However, the delay in the legislative process hit a snag. The amendment should have been effective from 1 July 2021, as required by the relevant legislative package of the European Commission that aims to standardise and simplify VAT rules in the European Union that affect e-commerce. As announced earlier by the Czech Financial Administration, despite the delay in the legislative process the new EU VAT rules on e-commerce have been in force from 1 July 2021 in the Czech Republic, just like in all EU Member States, as required by the EU Directive.

Thus for the transition period from 1 July to 30 September 2021, taxpayers could make use of the directive’s direct effect and apply the rules defined in European legislation. This option was used by the vast majority of taxpayers. The main reason is that in other EU countries the relevant rules were amended from 1 July 2021, and it was not possible to continue applying the original procedures.

Now, however, the VAT Act of the Czech Republic is compliant with the relevant European directive. The main changes of the amendment concern the following areas:

Remote sale of goods (formerly, sending goods)

One of the most important changes to the VAT Act of the Czech Republic affects the taxation of shipments of goods between EU Member States. The original limit for delivering goods to final customers in other EU countries through an e-shop was EUR 35,000 or EUR 100,000, and was counted separately for each country. Now there is a single limit of EUR 10,000 per year for all EU Member States together. The limit for the duty to register for VAT in other EU countries will therefore be reached very soon.

Extension of the One Stop Shop concept

However, the European directive and the amendment to the VAT Act of the Czech Republic allow expanded use of the One Stop Shop (OSS) concept. If an e-shop registers with the OSS in the Czech Republic, it will pay VAT on all consignments to other EU countries in the Czech Republic in the form of a special VAT return and will also not have to register for VAT in any other EU Member State. This option can also be utilised for the import of consignments up to a value of EUR 150.

Abolition of exemption from VAT for low-value goods imports

According to this recent amendment, in the case of importing goods with a value not exceeding EUR 22 the exemption from VAT is cancelled. They are now subject to VAT.

If you are affected by the aforementioned changes of the VAT Act of the Czech Republic, please do not hesitate to contact the experts of WTS Alfery, the exclusive representative of WTS Global for the Czech Republic.

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The system already existed in the Romanian Fiscal Code under the name “Mini One Stop Shop” (MOSS) before 1 July, but only for electronic services. On 1 July 2021, it was expanded to include several categories of transaction, becoming the “One Stop Shop” (OSS).

These provisions aim to extend the simplification measures applicable to certain transactions with non-taxable persons (mainly natural persons) and applying VAT from the Member State of the buyer (thus avoiding registration for VAT purposes in multiple EU states).

Three special OSS regimes in Romania

Since 1 July 2021, three special OSS regimes are in force in Romania:

• The first of the special OSS regimes can be applied for certain services provided by taxable persons not established in the European Union towards non-taxable persons.

• The second of the special OSS regimes can be applied for transactions with non-taxable persons for distance sales of goods between Member States, for deliveries of domestic goods made by electronic interfaces facilitating such deliveries and for certain services provided by taxable persons established in the EU towards non-taxable persons, but not in the Member State of consumption.

• The third of the special OSS regimes can be used for the distance sale of goods imported from outside the EU.

A single ceiling of EUR 10,000 (roughly RON 46,337 in Romania) has been set in all Member States for intra-community deliveries of distance goods or, inter alia, for services provided electronically. So if this threshold is exceeded, the special regime is applied. However, it is possible to apply the special regime for at least two calendar years even if the ceiling is not exceeded.

Basically, in the case of sales to individuals from other EU countries, a Romanian company will apply:

• the Romanian VAT rate for sales under the ceiling,
• the VAT rate in the buyer’s state for sales above the ceiling.

Special regime for services provided by taxable persons not established in the European Union

Any taxable person not established in the European Union may use a special regime for all services provided to non-taxable persons who are established in the EU. The special regime allows, inter alia, the registration in a single Member State of a taxable person not established in the EU for all services provided to non-taxable persons established in the EU.

The entity will receive a special registration code for VAT purposes, and it is not necessary to appoint a tax representative.

By the end of the following month after the end of each calendar quarter, this entity must submit a special VAT return (in EUR) – regardless of whether services were provided under the special regime – which will contain:

• the special registration code for VAT purposes;
• total value, excluding VAT, of the services under the special regime, the applicable VAT rates and the corresponding amount of VAT subdivided into quotas, due to each Member State of consumption,
• the total amount of VAT due in the EU.

The taxable person not established in the EU must pay the total amount of VAT due in the EU, to a special account, in EUR, by the date on which the special declaration must be submitted. It cannot deduct VAT through the special tax return, but it can request a VAT refund under certain conditions (amongst others, if there is a reciprocity agreement regarding the VAT refund between Romania and the respective country).

Click here if you want to read the full article about the new special OSS regimes in Romania on the homepage of Ensight, the exclusive representative of WTS Global in the country.

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