Introduction
On 8 July 2024, the European Commission (the "Commission") adopted a legislative package to amend key VAT regulations. This initiative aims at modernizing VAT procedures by introducing an electronic VAT exemption certificate, streamlining the process for businesses and aligning with the digital transformation across Member States.
Context of the proposal
The Commission’s proposal specifically targets Council Directive 2006/112/EC (the "VAT Directive") and Council Implementing Regulation (EU) No 282/2011. The Commission’s intention is to create an electronic VAT exemption certificate. This certificate would be designed to introduce an electronic exemption certificate confirming that a transaction qualifies for a specific exemption under first subparagraph of Article 151(1) of that VAT Directive. This proposal will therefore include an e-form in PDF format as well as the electronic procedure applicable to the VAT exemption certificate, allowing the use of advances electronic signatures.
Digital transformation and administrative efficiency
In order to enable Member States to keep pace with the increasing demands of the digital age and to reduce the administrative burden on businesses, the current paper certificate should be replaced by this new electronic certificate. Such electronic conversion will allow Member States to comply with their EU obligations to implement necessary technical means, thereby enabling the electronic processing of electronically signed documents when using an online service provided by or on behalf of a public sector body. In addition, this initiative serves to align with the area of excise duties, where electronic procedures are already possible.
Legislative amendments
To that end, Article 1 proposes to amend the VAT Directive by permitting the Commission, in consultation with Member States, to adopt implementing measures on the electronic certificate confirming that a transaction qualifies for a specific exemption under the first subparagraph of Article 151 (1) of the VAT Directive. The electronic certificate will be issued by the eligible body or person to whom the exempt supply of goods or services is made and who, together with the host Member State, will sign that certificate by electronic means. A comment will be added to the certificate if the conditions for exemption are not met or cease to apply. The eligible body or individual issuing the electronic certificate is the person liable to pay any VAT to the Member State where it is due.
Transitional period and legal certainty
Due to the large number of ongoing IT projects, Member States may alternatively use the paper version of the certificate for transactions carried out until 30 June 2030. For the sake of legal certainty and administrative simplification and for optimum cost-efficiency, no distinction will be made between national and international transactions within the electronic exemption certificate.
Implementation timeline
The Commission has established a clear timeline for Member States to adapt to the new system. Member States are required to implement the electronic procedures by 1 July 2026, ensuring sufficient time for a smooth transition to the new framework.
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