VAT modernization for the digital age

To achieve this objective, changes are proposed at two levels: electronic invoicing and digital reporting of operations.

Most of the changes are expected to come into force on January 1st, 2028. It seems distant, but the deadline will allow the taxable persons to make the necessary adaptations in due time and without their implementation causing any distortions to the normal functioning of their businesses.

However, there are a set of rules on electronic invoicing that should already be in force in 2024.

• Electronic invoicing

From 2024 onwards, electronic invoice will no longer be subject to the approval from the recipient and Member States may oblige taxpayers to issue electronic invoices.

From 2028 onwards, paper invoices will only be acceptable in case of transactions which digital communication obligations are not mandatory and global invoices will no longer be permitted.

• Digital reporting of operations

Reporting businesses would need to share the data of the e-invoice within two working days after the invoice is issued.

The reporting obligation applies to all taxable persons, regardless of the turnover, and to all B2B transactions within the EU, regardless of their monetary value.

The information must be transmitted electronically, transaction by transaction. Member States that do not yet oblige their taxable persons to report transactions between companies must adopt such a system and those that already have the system in place must adapt it to the EU system by 2028.

The information thus received will be shared by the Tax Authorities taxes in the EU central database (VIES).

Finally, it should be noted that, since these new reporting obligations provide all relevant information in real time to the Tax

Authorities, it was proposed to eliminate the obligation for companies to submit the recapitulative statements.

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Susana Claro
^{Indirect Tax Partner, PwC Portugal}