The single VAT registration pillar of the EU VAT in the Digital Age (ViDA) initiative, which becomes effective on 1 July 2028, is designed to substantially reduce the number of VAT registrations of businesses in the EU (for prior coverage, see the article in the November 2024 issue of Indirect Tax News). ViDA will allow businesses to register for VAT purposes in a single EU member state and address their VAT compliance obligations via a single portal in order to mitigate the administrative burdens, particularly for businesses making cross-border supplies of goods throughout the bloc. Ideally, a business should be registered only in its member state of establishment, but there may be situations where a business must register in multiple EU member states.
The single VAT registration pillar of ViDA has three components:
The OSS will be extended to cover domestic supplies of goods, supplies with installation or assembly, supplies on board EU passenger transport and supplies of electricity, gas, heating and cooling (the latter will apply as from 1 January 2027). The OSS applies only where the supplier is not established in the member state where the supplies are made.
The mandatory reverse charge rule also will be extended. It will apply on all B2B supplies of goods and services where the supplier is not established and VAT-registered in the EU member state where VAT is due and the recipient is identified for VAT purposes in that member state. The supplier will be required to include the supply for which the VAT is reverse charged in its recapitulative statement. These supplies will fall within the scope of digital reporting requirements once these obligations are in effect. Supplies of goods under the margin scheme for second-hand goods are excluded from the reverse charge.
If a business transfers its own goods from one member state to another, both an intra-Community supply in the member state of departure and an intra-Community acquisition in the member state of arrival of the goods must be reported. This could result in the need for multiple VAT registrations for businesses in the EU.
Therefore, a new special scheme for the transfer of own goods is being introduced, under which monthly VAT returns will have to be filed to report transfers. Transfers made under the scheme will not have to be reported in the recapitulative statement (and are not included in the digital reporting obligations). The intra-Community acquisition in the member state of arrival of the goods is exempt from VAT. The scheme cannot be applied for goods in relation to which there is no full right to deduction in the member state of arrival.
The call-off stock arrangement will be abolished because of the new special scheme. The last transfer of own goods under the call-off stock scheme can be made on 30 June 2028 and the ownership of the goods must be transferred to the intended customer by 30 June 2029.
The extensions of the OSS and reverse charge will be welcomed by businesses that can avoid multiple VAT registrations and the related administrative and cost burdens. These benefits will be somewhat offset by the fact that supplies covered by the new reverse charge rule will be subject to the digital reporting requirements as from 1 July 2030. It is unfortunate that transfers of own goods will still have to be declared, but the OSS does make this process easier. Compliance with the rules will help to avoid penalties or exclusion from the scheme.
Hendy van Hoof
Madeleine Merkx
Marco Beerens
BDO in Netherlands
Components of Single VAT registration
The single VAT registration pillar of ViDA has three components:
- Extension of the One Stop Shop regime (OSS);
- Extension of the mandatory reverse charge rule; and
- Introduction of a special scheme for the transfer of own goods.
Extension of the OSS
Under the OSS, businesses are allowed to file a single VAT return and make a single VAT payment for VAT due in all EU member states. The member state where the business is registered for the scheme will forward the relevant part of the VAT return and payment to the member state where VAT is due.The OSS will be extended to cover domestic supplies of goods, supplies with installation or assembly, supplies on board EU passenger transport and supplies of electricity, gas, heating and cooling (the latter will apply as from 1 January 2027). The OSS applies only where the supplier is not established in the member state where the supplies are made.
Extension of the Mandatory Reverse Charge
The mandatory reverse charge rule also will be extended. It will apply on all B2B supplies of goods and services where the supplier is not established and VAT-registered in the EU member state where VAT is due and the recipient is identified for VAT purposes in that member state. The supplier will be required to include the supply for which the VAT is reverse charged in its recapitulative statement. These supplies will fall within the scope of digital reporting requirements once these obligations are in effect. Supplies of goods under the margin scheme for second-hand goods are excluded from the reverse charge.
Introduction of a Special Scheme for the Transfer of Own Goods
If a business transfers its own goods from one member state to another, both an intra-Community supply in the member state of departure and an intra-Community acquisition in the member state of arrival of the goods must be reported. This could result in the need for multiple VAT registrations for businesses in the EU. Therefore, a new special scheme for the transfer of own goods is being introduced, under which monthly VAT returns will have to be filed to report transfers. Transfers made under the scheme will not have to be reported in the recapitulative statement (and are not included in the digital reporting obligations). The intra-Community acquisition in the member state of arrival of the goods is exempt from VAT. The scheme cannot be applied for goods in relation to which there is no full right to deduction in the member state of arrival.
The call-off stock arrangement will be abolished because of the new special scheme. The last transfer of own goods under the call-off stock scheme can be made on 30 June 2028 and the ownership of the goods must be transferred to the intended customer by 30 June 2029.
BDO Insight
The extensions of the OSS and reverse charge will be welcomed by businesses that can avoid multiple VAT registrations and the related administrative and cost burdens. These benefits will be somewhat offset by the fact that supplies covered by the new reverse charge rule will be subject to the digital reporting requirements as from 1 July 2030. It is unfortunate that transfers of own goods will still have to be declared, but the OSS does make this process easier. Compliance with the rules will help to avoid penalties or exclusion from the scheme. Hendy van Hoof
Madeleine Merkx
Marco Beerens
BDO in Netherlands