REGULATORY SCRUTINY BOARD OPINION Proposal for a COUNCIL DIRECTIVE amending Directive 2006/112/EC as regards VAT rules for the digital age Proposal for a COUNCIL REGULATION amending Regulation (EU) No 904/2010 as regards the VAT administrative cooperation arrangements needed for the digital age Proposal for a COUNCIL IMPLEMENTING REGULATION amending Implementing Regulation (EU) No 282/2011 as regards information requirements for certain VAT schemes

EUROPEAN COMMISSION
Brussels, 24.6.2022
SEC(2022) 433 final
REGULATORY SCRUTINY BOARD OPINION
Proposal for a COUNCIL DIRECTIVE amending Directive 2006/112/EC as regards
VAT rules for the digital age
Proposal for a COUNCIL REGULATION amending Regulation (EU) No 904/2010 as
regards the VAT administrative cooperation arrangements needed for the digital age
Proposal for a COUNCIL IMPLEMENTING REGULATION amending Implementing
Regulation (EU) No 282/2011 as regards information requirements for certain VAT
schemes
{COM(2022) 701 final} - {COM(2022) 703 final} - {COM(2022) 704 final}
{SWD(2022) 393 final} {SWD(2022) 394 final}
Offentligt
KOM (2022) 0703 - SEK-dokument
Europaudvalget 2022
________________________________
This opinion concerns a draft impact assessment which may differ from the final version.
Commission européenne, B-1049 Bruxelles - Belgium. Office: BERL 08/010. E-mail: regulatory-scrutiny-board@ec.europa.eu
EUROPEAN COMMISSION
Regulatory Scrutiny Board
Brussels,
RSB
Opinion
Title: VAT in the Digital Age
Overall opinion: POSITIVE WITH RESERVATIONS
(A) Policy context
VAT is a major source of revenue for Member States’ budgets. However, the current VAT
rules are 30 years old and have not kept pace with the digitalisation of the economy. VAT
collection and control is suboptimal, and the EU VAT legislative framework is both not
fully adapted to deal with the new digital reality and is also prone to fraud. Burdens and
compliance costs are increasingly excessive, as the digital economy and new business
models create new challenges and costs for tax administrations and businesses.
The VAT in the Digital Age initiative aims to modernise the VAT system in three areas: (i)
VAT reporting, (ii) VAT treatment of the platform economy, and (iii) VAT registration.
The Commission announced this initiative as part of its Action Plan for fair and simple
taxation supporting the recovery and it is included in the 2022 Commission Work
Programme.
Ref. Ares(2022)4634471 - 24/06/2022
2
(B) Summary of findings
The Board notes the useful additional information provided in advance of the
meeting and commitments to make changes to the report.
However, the report still contains significant shortcomings. The Board gives a
positive opinion with reservations because it expects the DG to rectify the following
aspects:
(1) The report does not provide sufficient evidence and detail of the identified
problems, in particular in terms of Member State and sectoral perspectives.
(2) The report does not sufficiently set out the evidence base behind the expected
impacts. It does not provide a clear description of the modelling behind the VAT
revenue estimates and of the methodology used for estimation of costs and
benefits in the scope of the One In, One Out approach.
(3) The report does not sufficiently explain the future configuration of the options, in
particular the expected structure of the EU digital reporting requirements and the
degree of flexibility envisaged for Member States .
(C) What to improve
(1) The problem section should more clearly outline the reasoning behind the problem
scope as well as the urgency to act. It should set out clearly why Member States with
digital reporting requirements (DRR) apply different methods and better explain why
some Member States have not yet introduced DRR. When discussing the VAT
treatment of the platform economy, the report should explain to what extent the
identified problems are significant for sectors beyond accommodation and transport
(such as finance, and professional services). It should also clarify what drives the VAT
Gap and how the quantitative level provided was calculated.
(2) The report should explain better how the baseline reflects the other ongoing and
existing related initiatives. It should be clear to what extent Member States can be
expected to introduce DRR (and similar solutions) domestically in the absence of
further EU measures.
(3) The report should provide more information on the methodology, underlying
assumptions and sources used in the impact analysis. It should summarise in the main
report the key methodological aspects, assumptions, and limitations. It should provide a
stronger connection between the impacts presented and the underlying methodology. It
should be clear how the two econometric models (C-efficiency and VAT Gap) are
applied across the analysis. The same metrics should be used to enable better
comparison of impacts. The report should better explain how different options will
reduce the estimated VAT Gap.
(4) Given the scale of the the presented estimates in scope of the One In, One Out
approach, the report should provide a more detailed description of the method behind
the estimates and clearly outline the metrics (in particular one-off versus recurrent
costs).
(5) The report should present a more final outline of the options and the sub-option
elements. It should clarify to what extent a future harmonised EU DRR system is tied
to a specific type of digital reporting requirement, such as SAF-T or e-invoicing. It
should also be clear about the future degree of flexibility for the Member States. It
3
should clarify what political choices exist, and present their differences in terms of
costs and benefits.
(6) The report should strengthen the comparison of options. It should present the net
benefits and benefit cost ratios and compare them across the option packages, including
in terms of proportionality.
(7) The report should better present the views of different stakeholder groups in the main
report, for example, stakeholder views on VAT treatment of the platform economy. It
should more systematically present the divergent views of different stakeholder groups
on the problems, options, and their impacts.
The Board notes the estimated costs and benefits of the preferred option(s) in this
initiative, as summarised in the attached quantification tables.
Some more technical comments have been sent directly to the author DG.
(D) Conclusion
The DG must revise the report in accordance with the Board’s findings before
launching the interservice consultation.
If there are any changes in the choice or design of the preferred option in the final
version of the report, the DG may need to further adjust the attached quantification
tables to reflect this.
Full title VAT in the Digital Age
Proposal for a Council Regulation supplementing Council
Implementing Regulation (EU) No 282/2011 laying down
implementing measures for Directive 2006/112/EC - Proposal
for a Regulation amending Council Regulation (EU) No
904/2010 on administrative cooperation and combating fraud in
the field of VAT
Reference number PLAN/2021/11943
Submitted to RSB on 25/05/2022
Date of RSB meeting 22/06/2022
ANNEX: Quantification tables extracted from the draft impact assessment report
The following tables contain information on the costs and benefits of the initiative on
which the Board has given its opinion, as presented above.
If the draft report has been revised in line with the Board’s recommendations, the content
of these tables may be different from those in the final version of the impact assessment
report, as published by the Commission.
4
1. Summary of costs and benefits
I.a. Overview of Benefits (total for all provisions) – Enhanced approach
Description Amount Comments
Direct benefits
Compliance cost
reductions
Pre-filling of VAT returns: EUR 4.3 billion savings Businesses will benefit from
the savings
The more widespread use of e-invoicing (due to quicker
issuance and the reduction in postage and printing costs) will
save EUR 1.9 billion
Businesses will benefit from
the savings
EUR 10.1 billion savings from removal of recapitulative
statements
Businesses will benefit from
the savings
EUR 0.5 billion savings in administrative costs resulting from
streamlining and clarifications for the from the platform
economy
Platforms to benefit from the
savings
VAT registration: almost completely eliminating the need to
VAT register for distance sellers will save up to EUR 8.7
billion registration costs
Businesses doing cross-border
trade who otherwise have to
register will benefit
Reduction of
fragmentation
costs (costs of
non-
harmonisation)
EUR 24.2 billion after the 5th year when the full
interoperability and convergence is reached)[1].
Businesses will benefit
Additional VAT
revenue
Between EUR 134 billion and EUR 171 billion: EUR 111
billion (digital reporting) and EUR 24 billion to EUR 66
billion (platform economy)[2]
Being a simplification measure, the VAT registration will
only bring minor additional VAT revenue.
Member States will benefit
Tax control The introduction of DRRs is expected to bring positive
impacts on the efficiency and effectiveness of tax control
activities
This would mainly result from
the improvement of the risk
analysis systems, which is the
main positive impact
acknowledged by tax
authorities that will benefit
Taxpayers will also benefit
because of more targeted
audits and sometimes less
audits
Levelling the
playfield
VAT reporting: reduction of MTIC and intra-Community
VAT fraud
Platform economy: competition made fairer between actors
performing in the same economic reality
VAT registration: Benefits on levelling the playing field
derived from the extension of the scope
VAT reporting: In particular, it
will be more difficult for
fraudsters to operate, since the
good faith trading partner in
the chain will disclose
(possibly in real-time) the
transactions to the authorities.
Platform economy: Part of the
increase in VAT collection will
come from participants in
economic life that are not VAT
taxable while enjoying the
network effects will make the
competition fairer
VAT registration may not be
responsible for substantial
amounts of fraud, regulatory
costs and complexity can
increase non-compliance,
especially among SMEs. Thus,
reducing the scope of
situations requiring VAT
registration for non-established
businesses would make
compliance simpler and
cheaper, and likely to improve
5
it.
Indirect benefits
Quicker
introduction of a
DRR for domestic
transactions across
Member States,
due to the model-
role played by the
EU DRR
Some specific benefits under option 4b (introduction of
domestic digital reporting requirement) will also materialise
because the voluntarily adoption of domestic DRRs.
Member States will benefit
Interoperability
and reduction of
fragmentation
Under selected option, any new introduction of domestic
reporting obligation must ensure the compatibility and
interoperability with existing intra-EU solution
Member States and businesses
will benefit
Indirect
compliance
benefits are very
likely under the
deemed supplier
regime.
First, the reduction of the number of taxpayers in charge of
paying VAT from millions of providers to hundreds of
(sometimes very large) platforms will markedly increase the
ability of tax administrations to monitor VAT liability in the
platform economy.
Secondly, the understatement of turnover to remain below the
VAT Scheme threshold, which is one of the main sources of
non-compliance in the platform economy pointed out by tax
authorities, will no longer lead to the evasion of the VAT due
on their supplies.
Businesses and member States
to benefit
Benefits from
business
automation
An important benefit is the automation of business processes
driven by the introduction of digital reporting requirements,
due to the electronic handling of transactional data
Larger, more structured,
business entities are likely to
obtain more savings due to
larger scale of their invoicing
and accounting processes and
because they have more means
and know-how to invest in
business automation
Environmental
benefits, i.e. the
monetary value of
the CO2 saved
Between EUR 0.01 billion and EUR 0.5 billion
Administrative cost savings related to the ‘one in, one out’ approach*
Direct cost Pre-filling of VAT returns EUR 4.3 billion
Direct cost E-invoicing related savings EUR 1.9 billion
Direct cost Removal of recapitulative
statements
EUR 10.1 billion
Direct cost VAT registration costs EUR 8.7 billion
Direct cost Fragmentation costs for
MNCs
EUR 24.2 billion
I.b. Overview of Benefits (total for all provisions) – Maximal approach
Description Amount Comments
Direct benefits
Compliance cost
reductions
Pre-filling of VAT returns: EUR 7 billion savings Businesses will benefit from
the savings
The more widespread use of e-invoicing (due to quicker
issuance and the reduction in postage and printing costs) will
save EUR 14.5 billion
Businesses will benefit from
the savings
EUR 10.1 billion savings from removal of recapitulative
statements
Businesses will benefit from
the savings
EUR 0.5 billion savings in administrative costs resulting from
streamlining and clarifications for the from the platform
economy
Platforms to benefit from the
savings
VAT registration: almost completely eliminating the need to
VAT register for distance sellers will save up to EUR 8.7
billion registration costs
Businesses doing cross-border
trade who otherwise have to
register will benefit
Reduction of
fragmentation
EUR 24.2 billion after the 5th year when the full
interoperability and convergence is reached)[3].
Businesses will benefit
6
costs (costs of
non-
harmonisation)
Additional VAT
revenue
Between EUR 284.4 billion and EUR 367.4 billion: EUR
221.4 billion (digital reporting) and EUR 63 billion to EUR
146 billion (platform economy)[4]
Being a simplification measure, the VAT registration will
only bring minor additional VAT revenue.
Member States will benefit
Tax control The introduction of intra EU and domestic DRRs is expected
to bring maximum positive impacts on the efficiency and
effectiveness of tax control activities
This would mainly result from
the improvement of the risk
analysis systems, which is the
main positive impact
acknowledged by tax
authorities that will benefit
Taxpayers will also benefit
because of more targeted
audits and sometimes less
audits
Levelling the
playfield
VAT reporting: reduction of MTIC and intra-Community
VAT fraud
Platform economy: competition made fairer between actors
performing in the same economic reality
VAT registration: Benefits on levelling the playing field
derived from the extension of the scope
VAT reporting: In particular, it
will be more difficult for
fraudsters to operate, since the
good faith trading partner in
the chain will disclose
(possibly in real-time) the
transactions to the authorities.
By inclusion of domestic
DRRs the chain of transaction
will be complete.
Platform economy: Part of the
increase in VAT collection will
come from participants in
economic life that are not VAT
taxable while enjoying the
network effects will make the
competition fairer
VAT registration may not be
responsible for substantial
amounts of fraud, regulatory
costs and complexity can
increase non-compliance,
especially among SMEs. Thus,
reducing the scope of
situations requiring VAT
registration for non-established
businesses would make
compliance simpler and
cheaper, and likely to improve
it. The removal of EUR 150
threshold will help the
competition by putting on
equal footing the businesses
inside and outside EU for
certain transactions under the
scope
Indirect benefits
Interoperability
and reduction of
fragmentation
Under selected option, the domestic reporting obligation must
ensure the compatibility and interoperability with existing
intra-EU solution
Member States and businesses
will benefit
Indirect
compliance
benefits are very
likely under the
deemed supplier
regime.
First, the reduction of the number of taxpayers in charge of
paying VAT from millions of providers to thousands of
platforms will markedly increase the ability of tax
administrations to monitor VAT liability in the platform
economy.
Secondly, the understatement of turnover to remain below the
VAT Scheme threshold, which is one of the main sources of
non-compliance in the platform economy pointed out by tax
authorities, will no longer lead to the evasion of the VAT due
on their supplies.
Businesses and member States
to benefit
7
Benefits from
business
automation
An important benefit is the automation of business processes
driven by the introduction of digital reporting requirements,
due to the electronic handling of transactional data. This is
maximised by the inclusion of domestic DRRs
Larger, more structured,
business entities are likely to
obtain more savings due to
larger scale of their invoicing
and accounting processes and
because they have more means
and know-how to invest in
business automation
Environmental
benefits, i.e. the
monetary value of
the CO2 saved
Between EUR 0.01 billion and EUR 0.6 billion
Administrative cost savings related to the ‘one in, one out’ approach*
Direct cost Pre-filling of VAT returns EUR 7 billion
Direct cost E-invoicing related savings EUR 14.5 billion
Direct cost Removal of recapitulative
statements
EUR 10.1 billion
Direct cost VAT registration costs EUR 8.7 billion
Direct cost Fragmentation costs for
MNCs
EUR 24.2 billion
(1) Estimates are gross values relative to the baseline for the preferred option as a whole (i.e. the impact of
individual actions/obligations of the preferred option are aggregated together); (2) Please indicate which
stakeholder group is the main recipient of the benefit in the comment section;(3) For reductions in regulatory
costs, please describe details as to how the saving arises (e.g. reductions in adjustment costs, administrative
costs, regulatory charges, enforcement costs, etc.;); (4) Cost savings related to the ’one in, one out’
approach are detailed in Tool #58 and #59 of the ‘better regulation’ toolbox. * if relevant
II.a. Overview of costs – Enhanced approach (total costs 2023-2032)
Citizens/Consumers Businesses Administrations
One-off Recurrent One-off Recurrent One-off Recurrent
Introduc
tion of
intra-
EU
digital
reportin
g
obligati
on
Direct costs
No cost
impact
No cost
impact
EUR 7.53
billion
compliance
costs for
businesses[5]
EUR 3.77
billion
compliance
costs for
businesses
EUR 0.43
billion
implemen
tation
costs for
tax
authoritie
s[6]
EUR 1.7
billion
implementa
tion costs
for tax
authorities
Indirect costs No cost
impact
No cost
impact
No cost
impact
Data
confidentialit
y: more data
will be
collected,
stored, and
exchanged
Familiaris
ation and
training
costs;
Awarenes
s
campaign
s
Data
confidentia
lity
Deemed
supplier
for
accomm
odation
and
transpor
t
services
Direct costs
No cost
impact
No cost
impact
Initial higher
costs related
to the
clarification
of taxable
status of the
existing
users
New burdens
for platforms
linked to the
administratio
n of
the deemed
supplier
regime
No cost
impact
No cost
impact
Indirect costs No cost
impact
Price
variation
(VAT/part of
VAT
currently not
paid may be
passed on the
consumer)
No cost
impact
No cost
impact
No cost
impact
No cost
impact
Extensi
on of
the
Direct costs
No cost
impact
No cost
impact
No cost
impact
No cost
impact
Minimal
costs
related to
No cost
impact
8
OSS,
reverse
charge
updates
of the
existing
OSS
schemes
Indirect costs No cost
impact
No cost
impact
No cost
impact
No cost
impact
No cost
impact
No cost
impact
Remova
l of the
optional
characte
r of the
IOSS
Direct costs
No cost
impact
No cost
impact
No cost
impact
No cost
impact
Marginal
costs
related to
small
increase
in
capacity
of current
systems
in place
No cost
impact
Indirect costs No cost
impact
No cost
impact No cost
impact
No cost
impact
No cost
impact
No cost
impact
Costs related to the ‘one in, one out’ approach
Total
Direct
adjustment
costs
No cost
impact
No cost
impact
No cost
impact
No cost
impact
Indirect
adjustment
costs
No cost
impact
No cost
impact
No cost
impact
No cost
impact
Administrative
costs (for
offsetting)
No cost
impact
No cost
impact
EUR 7.53
billion
EUR 3.77
billion
II.b. Overview of costs – Maximal approach (total costs 2023-2032)
Citizens/Consumers Businesses Administrations
One-off Recurrent One-off Recurrent One-off Recurrent
Introduc
tion of
intra-
EU
digital
reportin
g
obligati
on
Direct costs
No cost
impact
No cost
impact
EUR 29
billion
compliance
costs for
businesses
EUR 14.5
billion
compliance
costs for
businesses
EUR 0.7
billion
implemen
tation
costs for
tax
authoritie
s
EUR 2.7
billion
implementa
tion costs
for tax
authorities
Indirect costs No cost
impact
No cost
impact
No cost
impact
Data
confidentialit
y: much
more data
will be
collected,
stored, and
exchanged
Familiaris
ation and
training
costs;
Awarenes
s
campaign
s
Data
confidentia
lity
Deemed
supplier
for
accomm
odation
and
transpor
t
services
Direct costs
No cost
impact
No cost
impact
Initial higher
costs related
to the
clarification
of taxable
status of the
existing
users
New burdens
for platforms
linked to the
administratio
n of
the deemed
supplier
regime
No cost
impact
No cost
impact
Indirect costs No cost
impact
Price
variation
(VAT/part of
VAT
currently not
paid may be
passed on the
No cost
impact
No cost
impact
No cost
impact
No cost
impact
9
consumer)
Extensi
on of
the
OSS,
reverse
charge
Direct costs
No cost
impact
No cost
impact
No cost
impact
No cost
impact
Minimal
costs
related to
updates
of the
existing
OSS
schemes
No cost
impact
Indirect costs No cost
impact
No cost
impact
No cost
impact
No cost
impact
No cost
impact
No cost
impact
Remova
l of the
optional
characte
r of the
IOSS
Direct costs
No cost
impact
No cost
impact
No cost
impact
No cost
impact
Costs
related to
small
increase
in
capacity
of current
systems
in place
and the
IT
systems
for
No cost
impact
Indirect costs No cost
impact
No cost
impact No cost
impact
No cost
impact
No cost
impact
No cost
impact
Costs related to the ‘one in, one out’ approach
Total
Direct
adjustment
costs
No cost
impact
No cost
impact
No cost
impact
No cost
impact
Indirect
adjustment
costs
No cost
impact
No cost
impact
No cost
impact
No cost
impact
Administrative
costs (for
offsetting)
No cost
impact
No cost
impact
EUR 29
billion
EUR 14.5
billion
(1) Estimates (gross values) to be provided with respect to the baseline; (2) costs are provided for each
identifiable action/obligation of the preferred option otherwise for all retained options when no preferred
option is specified; (3) If relevant and available, please present information on costs according to the
standard typology of costs (adjustment costs, administrative costs, regulatory charges, enforcement costs,
indirect costs;). (4) Administrative costs for offsetting as explained in Tool #58 and #59 of the ‘better
regulation’ toolbox. The total adjustment costs should equal the sum of the adjustment costs presented in the
upper part of the table (whenever they are quantifiable and/or can be monetised). Measures taken with a
view to compensate adjustment costs to the greatest extent possible are presented in the section of the impact
assessment report presenting the preferred option.
Electronically signed on 24/06/2022 10:29 (UTC+02) in accordance with Article 11 of Commission Decision (EU) 2021/2121