What is the Group on the Future of VAT?
The Group on the Future of VAT (GFV) is an informal expert group established by the European Commission. It consists of representatives from national tax administrations across EU Member States. The primary purpose of the GFV is to provide a forum for consulting VAT experts on pre-legislative initiatives and to discuss the future direction of VAT policies within the EU.
Originally, the GFV was a temporary group created in the context of the Green Paper on the future of VAT. However, it has since been merged with Working Party No 1 into a single permanent expert group. This group plays a crucial role in shaping VAT legislation and ensuring that it meets the evolving needs of the EU’s single market.
Meetings in 2024
In 2024, the Group of Future of VAT convened four times to discuss significant developments and reforms in value-added tax (VAT) systems across the European Union. Key highlights from these meetings reveal a proactive approach to modernizing VAT frameworks, particularly through the implementation of the VAT in the Digital Age (ViDA) package.
One of the primary focus areas was the implementation of the new SME scheme. The European Commission presented updated Explanatory Notes and a draft guide aimed at simplifying compliance for small and medium-sized enterprises (SMEs). A dedicated SME web portal is being developed to help businesses check eligibility and verify EX numbers, with plans for a press campaign in autumn 2024 to raise awareness.
The discussions also emphasized the Single VAT Registration (SVR) analysis, which identified necessary IT updates and changes to Implementing Acts. A workshop scheduled for June will further delve into these technical aspects, ensuring a smoother transition for businesses.
Moreover, the Commission outlined crucial reforms regarding the Import One Stop Shop (IOSS), including the removal of the EUR 150 customs threshold. These changes aim to enhance the efficiency and security of the IOSS system, encouraging more businesses to engage in cross-border trade.
The meetings also addressed broader implications of the ViDA package, particularly in relation to digital reporting requirements and the platform economy. Delegates expressed the need for clear guidance to facilitate member states’ implementation of these requirements.
As the EU continues to refine its VAT systems, these discussions reflect a commitment to fostering a more accessible and efficient tax environment, ultimately supporting economic growth and sustainability across the region. The next meeting is scheduled for March 2025, promising further advancements in the VAT landscape.
Highlights of the meetings
- SME Scheme Implementation: The Commission presented updated Explanatory Notes and a draft guide for the new SME scheme, aiming to provide practical guidance for small enterprises. An SME web portal is being developed to help businesses check eligibility and verify EX numbers, with a press campaign planned for autumn 2024.
- Single VAT Registration (SVR) Analysis: A preliminary analysis of the SVR elements of the VAT in the Digital Age (ViDA) package was discussed, highlighting necessary IT changes and updates to Implementing Acts and Guides. A workshop in Helsinki is scheduled for June to further discuss these changes.
- ViDA Package Negotiations: The Commission updated delegates on the state of negotiations in the Council regarding the ViDA legislative package. Significant progress has been made, particularly on the SVR volet, with remaining challenges related to Digital Reporting Requirements (DRR) and the Platform Economy.
- Customs Reform and IOSS Changes: The Commission outlined a three-step reform to secure IOSS numbers, incentivize IOSS use, and remove the EUR 150 customs threshold. These changes aim to improve the security and efficiency of the IOSS system.
- Relief Measures for Ukraine: The Commission adopted Decision (EU) 2024/775, extending relief from import duties and VAT exemption for goods distributed to those fleeing Russia’s military aggression against Ukraine and those in need in Ukraine. This decision is applicable from January 1, 2024, to December 31, 2024.
- VAT Treatment of Donations and Destruction of Goods: The meeting discussed the VAT treatment of donations and the potential fiscal incentives for the destruction of goods, highlighting the need for harmonization and better environmental practices. Delegates acknowledged the issue and suggested further analysis and possible harmonization at the EU level.
- ViDA Package Implementation: The Commission provided updates on the Single VAT Registration (SVR) and Import One Stop Shop (IOSS) schemes, emphasizing the need for improvements to prevent tax evasion. A workshop in Helsinki at the end of June will further discuss these topics, focusing on securing IOSS identification numbers and streamlining verification processes.
- Future of VAT Post-ViDA: The VAT Expert Group (VEG) is reflecting on the future of VAT to modernize and simplify the system after the ViDA package adoption. A report is expected by the end of 2024, which will be presented to the Group on the Future of VAT (GFV).
- New SME Scheme Implementation: The Commission updated delegates on the finalization of the SME Explanatory Notes and Guide, incorporating feedback from previous meetings. Progress was also reported on the SME Web Portal and SME-on-the-Web application for verifying EX numbers attributed to SMEs.
- Miscellaneous Updates: Delegates were informed about the approval process for a report on vouchers under Article 410b of the VAT Directive and an initiative to transform the VAT exemption certificate into an electronic form. The next meeting is tentatively scheduled for October 1, 2024, likely to be held online.
46th meeting (October 9, 2024)
- Fiscalis Project Group on E-Invoicing: The Fiscalis Project Group FPG/043, led by the Danish Tax Administration, aims to establish common knowledge and understanding of digital reporting solutions in Member States. The project started in May 2024 and will last one year, with the next meeting scheduled for October 31, 2024, in Greece.
- E-Commerce Package Evaluation: The 2023 e-commerce statistics showed over EUR 26 billion of VAT declared via the three OSS schemes, with more than 150,000 traders registered. While the VAT e-commerce package has been successful, the Commission recognized the need for improvements included in the VAT in the Digital Age (ViDA) package.
- Single VAT Registration (SVR) and IOSS Implementation: A seminar in Helsinki discussed the implementation of SVR and securing the IOSS verification process. The Commission proposed setting up a project group to assess feasibility and pilot potential solutions, with strong support from delegates.
- SME Scheme and Web Portal: The SME Web Portal, modeled on the OSS Web Portal, will launch by the end of October 2024. It will provide information on national VAT rules for SMEs and include a simulator for cross-border exemption eligibility. Member States will provide threshold information starting November 2024.
- VAT Part of Customs Reform: The Commission discussed the state of play regarding the removal of the EUR 150 threshold for IOSS and special arrangements. The Hungarian Presidency is working on aligning customs reform with IOSS changes, emphasizing the need to secure IOSS use before extending its scope.
47th meeting (December 2, 2024)
- ViDA Package Discussion: The meeting focused on the ViDA Package, particularly the Digital Reporting Requirements (DRR) and platform economy implementation. Delegates supported the proposed timeline and emphasized the need for clear guidance to aid Member States in implementing domestic systems.
- Upcoming Fiscalis Workshop: A workshop is planned for April 8-10, 2025, in Vienna to further discuss the ViDA Package. Delegates were invited to submit written comments by the end of January 2025.
- SME Web Portal Launch: The Commission announced the launch of the SME Web Portal on November 11, 2024, which includes Explanatory Notes and a Guide. The portal’s content will be completed with the help of delegates.
- Pre-Registration for Transfer of Own Goods Scheme: The Commission clarified that pre-registration for the Transfer of Own Goods Scheme could begin on April 1, 2028, similar to the pre-registration process for the IOSS and Union OSS schemes.
- Next Meeting: The next meeting is tentatively scheduled for March 12, 2025, and is expected to be held in person.
