Communication from the Commission to the Council - The technological developments in the field of e-invoicing and measures aimed at further simplifying, modernising and harmonising the VAT invoicing rules
Date: 2009-01-28
Institutions: European Commission
Subjects: VAT, basis of tax assessment, distributive trades, provision of services, report, tax exemption, tax harmonisation, tax on consumption, tax relief

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 28.1.2009 
COM(2009) 20 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 

The technological developments in the field of e-invoicing and measures aimed at 
further simplifying, modernising and harmonising the VAT invoicing rules 

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COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 

The technological developments in the field of e-invoicing and measures aimed at 
further simplifying, modernising and harmonising the VAT invoicing rules 

1. 

INTRODUCTION 

Under  Article  237  of  Council  Directive  2006/112/EC1  (‘the  VAT  Directive’),  the 
Commission is required by 31 December 2008 at the latest to present a report and, if 
appropriate,  a  proposal  amending  the  conditions  for  e-invoicing  to  take  account  of 
technological  developments.  A  proposal  amending  the  conditions  for  e-invoicing 
accompanies this Communication. 

Both this communication and the proposal go further than the requirement contained 
in  Article  237.  This  is  justifiable  since  Council  Directive  2001/115/EC2  (‘the 
Invoicing  Directive’),  now  incorporated  in  the  VAT  Directive,  is  acknowledged  as 
not fully achieving its aim of simplifying, modernising and harmonising the rules on 
VAT  invoicing.  The  various  options  available  to  the  Member  States,  and  the 
application of those options, have allowed Member States to maintain different rules 
on invoicing. 

These  differences  in  the  rules  are  particularly  apparent  for  e-invoicing  and  have 
hampered  the  widespread  use  of  cross  border  e-invoicing.  In  other  areas,  too, 
differences in the rules place extra burdens on businesses and prevent or hinder them 
from  taking  advantage  of  options  such  as  self-billing,  summary  invoices  and 
electronic storage. 

2. 

TECHNOLOGICAL DEVELOPMENTS IN E-INVOICING 

To meet the requirement to report on the technological developments in e-invoicing, 
the topic was included in a study on invoicing conducted for the Commission. The 
results of that study are available on the Commission website3. 

A  separate  paper  to  the  Phase  3  recommendations  contained  in  the  study,  entitled 
‘Appendix:  White  paper  on  technology  development’,  describes  e-invoicing 
technology. The paper gives an overview of the history and the current state of play 
as  regards  systems  to  ensure  the  authenticity  and  integrity  of  data  such  as  invoices 
transmitted by electronic means. 

2.1. 

Invoicing study findings on new technologies for e-invoicing 

The  invoicing  study  does  not  mention  any  specific  technology  as  the  preferred 
method for the safe transmission and receipt of e-invoices. In fact for e-signatures the 

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OJ L 347, 11.12.2006, p. 1. 
OJ L 15, 17.1.2002, p. 24. 
http://ec.europa.eu/taxation_customs/common/publications/studies/index_en.htm 

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study states that various signature systems are being used to guarantee authenticity of 
origin and the integrity of the content. These have various advantages and drawbacks 
in  terms  of  security,  complexity  and  speed.  For  instance,  Public  Key  Infrastructure 
based on asymmetric but complementary keys has a high security level and is used in 
applications related to banking, but as it is inherently complex it is not as quick as 
other signature systems. 

It also seems clear that there is at present no single business-friendly technology to 
support e-invoicing throughout the EU that satisfies both large and small businesses 
and has the full support of all the tax authorities. Moreover, there is no clear prospect 
of a suitable technology-based solution encompassing the needs of all parties in the 
next few years. Thus technology should not be relied upon to improve the take up of 
e-invoicing.  

For these reasons a different approach seems more appropriate. Indeed the invoicing 
study  stated:  ‘instead  of  looking  for  new  technologies,  issues  with  current 
technologies  should  be  solved’.  Moreover,  the  Expert  Group  on  E-invoicing  set  up 
by  Commission  Decision4,  in  an  open  letter  to  the  Commission,  states  that  any 
solution  to  e-invoicing  should  be  technology-neutral  as  a  matter  of  principle. 
Business, likewise, would like to see e-invoicing become more accessible while still 
secure,  but  built  around  its  needs  and  the  controls  already  in  place  to  ensure  that 
invoices in general are compliant. 

3. 

VAT OBSTACLES TO PROMOTING E-INVOICING 

Given the lack of an obvious technological solution, it is not surprising that the VAT 
Directive,  based  on  a  technological  approach  to  e-invoicing,  has  not  led  to  a  rapid 
uptake  of  e-invoicing.  Moreover,  where  the  technological  approach  allows  various 
options, this in turn allows Member States to implement the rules on e-invoicing in 
different ways. This has created a mix of e-invoicing rules that have been difficult for 
businesses to comply with, especially in cross-border e-invoicing.  

The  invoicing  rules  applicable  under  the  national  legislation  of  the  Member  States 
were  mapped  as  part  of  the  invoicing  study.  In  terms  of  e-invoicing,  the  study 
confirms there are an array of both different interpretations and the use of different 
options. This has led to a situation whereby it is difficult and costly for businesses to 
set up an EU-wide, compliant e-invoicing solution. 

3.1. 

Solutions to the VAT obstacles to e-invoicing 

There are a number of possible ways of removing the VAT obstacles to e-invoicing. 
The favoured option for businesses would be to treat e-invoices and paper invoices 
equally. Another option would be to develop a model agreement between the parties 
involved in e-invoicing, whilst a third option would be to keep e-signatures and EDI 
as transmission methods but remove the problematic options. 

The  Commission’s  preferred  solution  is  to  treat  the  transmission  of  all  invoices 
equally, whether they are sent on paper or by electronic means, and therefore abolish 

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Decision 2007/717/EC (OJ L 289, 7.11.2007, p. 38). 

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specific  requirements  for  advance  e-signature  or  EDI  for  e-invoices.  This  creates  a 
technology-neutral solution. 

As  with  paper  invoices,  the  validity  of  an  e-invoice  should  be  checked  against  the 
accounting records of the business, such as the purchase order, payment and delivery 
note. Invariably, it is the controls within a business that help determine the validity of 
the invoice, regardless of the means of transmission. 

The  solution  to  the  low  take-up  of  e-invoicing  should  build  on  other  ideas  too:  the 
principles identified by the Expert Group on E-invoicing can serve as useful pointers. 
The  Group  supports  treating  e-invoices  in  the  same  way  as  paper  invoices.  It  also 
supports  maintaining  the  cornerstone  of  current  e-invoicing  rules,  i.e.  that 
authenticity of origin and the integrity of the content should be guaranteed in a way 
that is technology-neutral. 

The Group is looking towards using their set of principles to form a code of practice 
for e-invoicing. Whether this approach gains acceptance only time will tell. What is 
critical  is  that  Member  States,  while  agreeing  to  treat  paper  and  e-invoices  equally 
for  VAT  purposes,  also  agree  on  a  common  approach  to  e-invoicing  so  that  a 
harmonised set of rules based on common principles can allow businesses to adopt e-
invoicing solutions easily and cost effectively. 

4. 

MEASURES  TO  FURTHER  SIMPLIFY,  MODERNISE  AND  HARMONISE  VAT  INVOICING 
RULES 

As stated above, the need to further simplify, modernise and harmonise the rules on 
invoicing  has  meant  that  this  report  to  Council  now  has  a  wider  remit  than  was 
originally  provided  for  in  the  VAT  Directive.  The  following  sections  set  out  the 
problems businesses face with the current invoicing rules, look at possible solutions, 
and outline the Commission’s preferred course of action. This is analysed from the 
point  of  view  of  the  issue,  content,  and  storage  of  invoices,  and  related  invoicing 
rules to support anti-fraud measures. 

4.1. 

Issue of an invoice 

4.1.1.  Problems related to issuing an invoice 

No single article in the VAT Directive clearly states which Member State’s rules on 
invoicing apply. Nevertheless, it is generally understood that the rules on invoicing 
are  those  applicable  in  the  Member  State  where  the  tax  is  due,  since  that  Member 
State  checks  the  tax  payable,  and  the  various  options  also  relate  to  that  Member 
State.  

However, this general acceptance of the prevailing rules being those where the tax is 
due presents certain difficulties for businesses. A taxable person making supplies on 
which  the  tax  is  due  in  another  Member  State  has  to  meet  that  Member  State’s 
conditions  on  invoicing.  Where  the  supplies  are  subject  to  the  reverse  charge 
procedure, the supplier must meet the invoicing rules without even being required to 
be  identified  for  VAT  in  the  Member  State  where  the  tax  is  due.  Given  that  the 

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recently adopted VAT Package5 states as the basic rule that the place of business-to-
business  (B2B)  supplies  is  where  the  customer  is  established,  this  problem  may 
become more acute.  

4.1.2. 

Solutions to problems relating to the issue of an invoice 

There  seem  to  be  two  approaches  to  providing  businesses  with  transparency  and 
legal certainty regarding the  invoices they issue. The first is to provide a means by 
which  information  on  invoicing  rules  is  easily  accessible  and  the  requirements  for 
compliance  are  simple  to  understand.  This  allows  Member  States  to  keep  their 
different  rules  on  invoicing.  However,  given  the  number  of  differences  between 
Member  States’  invoicing  rules,  this  would  not  significantly  reduce  burdens  on 
business. 

The alternative would be to move towards harmonised invoicing rules. 

4.1.3.  Commission’s view for B2B supplies 

The  preferred  way  forward  would  be  to  create  a  complete  set  of  harmonised  rules 
whereby a taxable person issuing an invoice from the place where he is identified for 
VAT will have legal certainty that the invoice is valid throughout the EU.  

The aim of a set of harmonised rules for B2B supplies is achievable. The Invoicing 
Directive has already achieved harmonisation in many areas, but there remain, within 
the  requirement  to  issue  an  invoice,  cases  where  the  invoicing  rules  are  not 
harmonised:  exempt  supplies,  the  time  limit  for  issuing  an  invoice,  summary 
invoices, self-billing and outsourcing to third parties outside the EU. 

4.1.4.  Exempt supplies 

As a way of reducing burdens on business, the VAT Directive allows Member States 
to release taxable persons from the requirement to issue invoices for certain exempt 
supplies. Member States vary in their approach to this option: some make full use of 
it,  others  apply  it  restrictively  and  others  do  not  apply  it  at  all.  Consequently 
businesses are often faced with selective exceptions to the general rule, and hence a 
greater administrative burden. 

In  order  to  harmonise  the  rules,  bearing  in  mind  the  need  to  balance  simplification 
with  adequate  control,  it  is  therefore  proposed  that  for  exempt  B2B  supplies  an 
invoice be required in all cases, but that this need only be a simplified invoice where 
the customer is in the same Member State as the supplier and the supplier does not 
have a right to deduction at the preceding stage.  

4.1.5.  Time when an invoice must be issued 

The  VAT  Directive  allows  Member  States  to  decide  the  time  limit  for  issuing  an 
invoice.  This  naturally  creates  different  rules  across  the  EU  and  the  possibility  for 
different tax points. Where the tax becomes chargeable on  cross-border  supplies of 
services,  this  has  already  given  rise  to  a  proposal  to  amend  the  rules  to  create  a 

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OJ L 44, 20.2.2008, p. 11. 

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common  tax  point  in  order  to  ensure  accurate  exchange  of  information  on 
recapitulative statements for services. 

With the aim of creating a common date on which tax becomes chargeable on intra-
Community  supplies  of  goods  and  cross-border  supplies  of  services  subject  to  the 
reverse charge procedure it is important that the invoice is issued in time to provide 
proof of these supplies. This proposal therefore lays down that taxable persons must 
issue  an  invoice  at  the  latest  by  15  calendar  days  in  the  month  following  that  in 
which  the  chargeable  event  occurred.  In  this  way  both  the  supplier  and  customer 
have sufficient time to record the supply in the same tax period. 

To allow Member States different rules for domestic supplies from those for cross-
border  supplies  would  create  additional  burdens  for  business.  For  this  reason,  the 
time limit is the same for all invoices. 

4.1.6. 

Summary invoices 

The  VAT  Directive  allows  Member  States  to  lay  down  conditions  for  summary 
invoices, resulting in different sets of conditions in different Member States.  

The  proposal  aims  to  create  a  harmonised  approach  to  summary  invoices  so  that 
businesses  gain  advantage  from  this  practice  across  the  EU.  To  this  end,  summary 
invoices  will  be  allowed  during  a  calendar  month  on  the  basis  that  the  details 
required  for  the  separate  supplies  are  included  in  the  summary  invoice.  Member 
States will not be allowed to impose any further conditions on summary invoices. 

4.1.7. 

Self-billing 

Under the current rules, an invoice can be issued by the supplier, by the customer, or 
by a third party on behalf of the supplier. It is recognised that for commercial reasons 
it is important to keep these options. 

However, for self-billing (invoices issued by the customer), the conditions applicable 
vary between the Member States. The proposal aims to withdraw the Member States’ 
option  of  imposing  conditions  on  self-billed  invoices  so  as  to  achieve  a  more 
harmonised set of rules across the EU. At the same time, in order to facilitate control 
of  self-billed  invoices,  the  customer  is  required  to  enter  the  words  ‘self-billed 
invoice’ on the invoice so that the supplier and tax authorities are aware of the issuer. 
The customer’s VAT number is also required on the invoice. 

4.1.8.  Outsourcing to third parties outside the EU 

In  general,  both  business  and  Member  States  take  the  view  that  imposing  specific 
conditions  on  third  parties  outside  the  EU  issuing  invoices  on  behalf  of  taxable 
persons  making  supplies  in  the  EU  is  unnecessary.  Indeed  sufficient  control 
measures  already  exist  to  hold  the  taxable  person  required  to  issue  the  invoice 
responsible.  

Therefore,  it  is  proposed  that  no  specific  conditions  be  imposed  on  third  parties 
issuing invoices on behalf of a taxable person. The current rules set out in Articles 
225 and 235 are removed. 

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4.1.9.  The Commission’s view of Business to Consumer (B2C) supplies 

The aim of a set of harmonised rules for B2C supplies is unlikely to be achievable in 
the  short  term.  Here  the  rules  are  less  harmonised.  Member  States  can  decide 
whether  or  not  they  require  the  taxable  person  to  issue  an  invoice.  Some  Member 
States make wide use of this option, others require the invoice to be issued for certain 
supplies, such as for building work, or where the value is above a certain threshold, 
while other Member States do not require B2C invoices. 

It is recognised that Member States need flexibility to be able to control the tax. At 
the same time, the aim of reducing burdens on business and simplifying the invoicing 
rules is important. In balancing these needs, the aim is to keep the option to require 
taxable  persons  to  issue  an  invoice  for  B2C  supplies  but  require  only  a  simplified 
invoice  giving  a  limited  amount  of  information.  In  addition,  established  and  non-
established taxable persons must be treated equally. 

Treating  established  and  non-established  taxable  persons  equally  means  that  non-
established  taxable  persons  can  only  be  required  to  issue  VAT  invoices  if,  for  an 
equivalent supply, an established taxable person making a B2C supply is required to 
issue  an  invoice.  This,  coupled  with  the  requirement  to  issue  only  simplified 
invoices, should reduce the burden on distance sellers. 

The special scheme for e-services and its wider scope under the VAT Package may 
require businesses to issue invoices in Member States where they are not identified 
for VAT. As with distance sellers, it is important the rules are transparent and easy to 
comply  with.  This  should  be  addressed  by  requiring  Member  States  to  make 
available,  on  a  web  site,  detailed  information  regarding  invoicing  rules  for  B2C 
supplies. In fact the ‘one-stop-shop scheme’ Commission proposal6 already provides 
for this and so the ‘mini-one-stop-shop scheme’ will in any case require something 
similar. 

4.1.10.  Member State whose rules are applicable 

With  a harmonised set  of  invoicing rules for B2B supplies, it would be possible to 
move  towards  establishing  that  the  applicable  rules  on  invoicing  are  those  in  the 
Member  State  where  the  supplier  making  the  supply  is  identified  for  VAT.  This 
would build on the concept of the one-stop-shop scheme, where VAT obligations can 
be met in the Member State of establishment rather than where the tax is due. 

B2C supplies should also establish the rules based on where the supplier making the 
supply is identified for VAT, since generally registration is required in the Member 
State of the customer.  

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COM(2004) 728, OJ C 24, 29.1.2005, p. 8. 

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4.2. 

Invoice details 

4.2.1.  Problems relating to the details required on an invoice 

In general the details required on an invoice cause fewer problems for business. The 
details  listed  in  Article  226  of  the  VAT  Directive  seem  to  meet  the  needs  of  tax 
authorities without being too burdensome for business. 

However,  what  is  noticeable  is  that  when  Member  States  require  invoices  to  be 
issued for certain supplies, typically B2C, there is a corresponding disparity between 
the  contents  of  the  invoices  as  Member  States  can  opt  to  require  fewer  details. 
However, this does not often have the intended burden reduction benefits because of 
the  cost  to  businesses  of  setting  up  and  adjusting  billing  systems  to  the  different 
rules. 

4.2.2. 

Solutions to the problems relating to the details of an invoice 

The ideal solution could be thought to be a standard set of invoice details in all cases. 
However, to adopt a single list of invoice details could cause practical difficulties in 
achieving a balance between different types of supplies such as B2C, B2B or VAT-
exempt.  Consequently  a  standard  set  of  invoice  items  might  entail  numerous 
exceptions to reflect commercial practices. 

The current rules lay down a harmonised list of invoice details, with Member States 
allowed  to  require  fewer  details  for  certain  types  of  supply.  The  drawback  is  that 
Member  States  have  different  approaches  to  exercising  this  option,  with  the  result 
that businesses often do not realise the benefits.  

Another  solution  could  be  to  bridge  the  gap  between  a  single  list  and  the  many 
exceptions put in place by Member States.  

4.2.3.  Commission view 

The  proposal  aims  to  create  two  categories  of  invoices:  those  for  which  a  right  of 
deduction  is  likely  and  control  is  thus  required  both  on  the  supplier  and  customer, 
and those for which a right of deduction is unlikely and control is essentially limited 
to  the  supplier.  The  former  is  referred  to  as  a  full  VAT  invoice,  the  latter  as  a 
simplified VAT invoice. 

Member  States  will  not  be  allowed  to  require  different  types  of  invoices  falling 
between  a  full  VAT  invoice  and  a  simplified  VAT  invoice.  Businesses,  of  course, 
will still be free to add other details on the invoice. 

4.2.4.  Full VAT invoice 

4.2.4.1.  Requirement to issue a full VAT invoice 

The  principle  is  maintained  that  a  taxable  person  is  required  to  issue  an  invoice 
where the supply is taxable for VAT purposes and the recipient is a taxable person or 
a non-taxable legal person. These invoices must contain a full set of details. 

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There are exceptions to this rule for certain exempt supplies where the customer is in 
the  same  Member  State,  for  credit  notes  and  for  small  value  invoices  below 
EUR 200. These fall under the rules on simplified invoices. 

4.2.4.2.  Information required on a full VAT invoice 

A harmonised list of the information required on an invoice is set out in Article 226 
of  the  VAT  Directive.  There  is  no  reason  to  make  substantial  changes  to  this  list. 
Nevertheless, to help with control of the tax and to simplify business requirements, 
three main changes are proposed.  

Firstly, the supplier is obliged to state the customer’s VAT identification number on 
the  invoice.  This  is  being  introduced  for  several  reasons.  It  will  help  the  tax 
authorities  to  better  control  the  tax  by  allowing  them  to  check  that  the  customer’s 
VAT  number  on  the  invoice  matches  that  of  the  business  claiming  a  right  of 
deduction. It harmonises invoicing rules throughout the EU, so requirements are the 
same  for  supplies  to  customers  in  the  same  Member  State  as  for  supplies  to  a 
customer in another Member State. It also serves to indicate to the business whether 
a  full  VAT  invoice  may  be  required,  since  for  B2C  supplies  the  customer  will  not 
have a VAT number. 

Furthermore, as the proposal aims to help increase the use of e-invoicing, it becomes 
more important to have a unique number to identify the customer, especially where 
service providers need to exchange e-invoices on behalf of their business clients. The 
VAT number could serve as the unique number by which e-invoices are exchanged 
and,  should  the  use  of  e-invoicing  increase  as  is  hoped,  a  unique  identity  number 
would already be in place. 

Secondly, the date of the supply of goods or services is replaced by the date on which 
the  tax  becomes  chargeable.  Since  the  rules  on  when  the  right  of  deduction  can  be 
exercised  depend  on  the  time  when  the  tax  becomes  chargeable,  logically  this  date 
should be given on the invoice. It will also help with the right of deduction for the 
customer  where  VAT  is  declared  by  the  supplier  on  receipt  of  payment,  another 
measure included in the proposal. 

Thirdly, for ‘reverse charge’ supplies where the customer in another Member State is 
liable for the VAT, to make it easier for the supplier they can replace the VAT rate 
and the VAT amount payable, as required on a full VAT invoice, with the amount for 
each type of good or service provided. 

4.2.5. 

Simplified VAT invoice 

4.2.5.1.  Use of a simplified VAT invoice 

Simplified invoices can be used in two cases. Firstly, Member States can require the 
use  of  a  simplified  invoice,  but  only  by  taxable  persons  making  B2C  supplies. 
Secondly, for certain B2B supplies the taxable person may issue a simplified invoice 
instead of a full VAT invoice. 

For B2C supplies, the risk of fraud rests mainly with the supplier since the customer 
is  unlikely  to  have  a  right  of  deduction.  The  invoice  should  only  give  the  details 
required to ensure the supplier has correctly accounted for the tax and consequently 

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the  level  of  detail  required  is  less  than  that  required  where  a  right  of  deduction  is 
allowed. 

For  B2B  supplies,  simplified  invoices  can  be  used  for  supplies  where  the  risk  of 
fraud is minimal. In such cases, the supplier should be allowed to choose to issue a 
simplified  invoice,  for  instance  for  certain  exempt  supplies,  since  there  is  no 
corresponding right of deduction, although where the customer is in another Member 
State, a full invoice is still required. 

In cases where the invoice amount is less than EUR 200, and the VAT amount that 
could  be  deducted  is  small,  as  is  the  resulting  risk  to  Member  States’  budgets,  the 
supplier  can  opt  to  issue  a  simplified  invoice.  This  builds  on  the  VAT  Committee 
consultations  in  which  the  majority  of  Member  States  requested  use  of  simplified 
invoicing for minor amounts. 

Another  instance  where  a  supplier  may  issue  simplified  invoices  is  where  a  credit 
note  is  issued.  Here  the  original  invoice  referred  to  in  the  credit  note  contains  the 
necessary details. 

4.2.5.2.  Content of a simplified VAT invoice 

The  details  required  on  a  simplified  invoice  are  those  listed  in  Article  238  of  the 
VAT  Directive,  under  which  Member  States  may,  after  consulting  the  VAT 
Committee,  allow  simplified  invoices  in  certain  cases.  The  only  addition  is  the 
requirement to include the value of the type of goods or services supplied. 

4.2.6.  Use of tax reference numbers 

Few Member States avail of the option set out in Articles 239 and 240 of the VAT 
Directive to use a number other than the VAT number to identify the supplier on an 
invoice. Given this situation, this option is being withdrawn and, instead, the national 
VAT  identification  number  must  be  stated  on  the  invoice  in  all  cases,  so  there  is  a 
uniform approach. 

4.3. 

Storage of invoices 

4.3.1.  Problems relating to the storage of invoices 

The  options  available  to  Member  States  allow  for  different  rules  on  storage.  This 
creates  barriers  not  only  for  larger  businesses  that  would  like  to  have  common 
storage  procedures  throughout  the  EU,  but  for  smaller  businesses  which  may  be 
prevented  by  the  conditions  laid  down  from  making  efficiency  savings,  e.g.  from 
electronic archiving. 

4.3.2. 

Solutions to the problems relating to the storage of invoices 

The  aim  here  is  to  reduce  burdens  on  business  without  undermining  the  tax 
authorities’ ability to control  the tax. Businesses  in  any  case need to store  invoices 
for commercial reasons but want greater flexibility as to the means  and  location  of 
storage and, if they are established in more than one Member State, common storage 
periods. 

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In  effect  any  solution  needs  to  strike  a  balance  between  simplification  and  control. 
The  aim  should  be  to  harmonise  the  rules  to  the  greatest  possible  extent  without 
compromising the tax authorities’ ability to ensure tax collection. 

4.3.3.  Commission view 

The Commission believes that common rules can be achieved in certain areas. One is 
a harmonised storage period, which based on the average current storage periods for 
the Member States, can be set at 6 years. This should also allow uniform exchange of 
invoices between Member States that need to check cross-border transactions. 

The  rules  on  storing  invoices  in  electronic  form  should  be  changed  to  allow 
businesses to use this medium as of right. Businesses would therefore be allowed to 
convert  paper  invoices  into  electronic  form  provided  the  invoices  were  accessible 
without undue delay and the content of the original invoice could be guaranteed as 
being the same as that of the e-storage. 

The Member State in which the rules applying to the storage of invoices should also 
be clearly laid down in law. For the supplier, the rules applicable should be those of 
the  Member  State  where  they  are  established  for  VAT.  For  the  customer,  the  rules 
applicable  should  be  those  of  the  Member  State  where  the  customer  belongs.  This 
should  not  pose  any  difficulties  for  the  tax  authorities  in  terms  of  control  since  the 
Member State should still have access to the invoices where the tax is due. 

Certain  other  options  can  also  be  removed,  for  example:  the  requirement  that  non-
taxable  persons  store  invoices;  that  paper  invoices  be  stored  in  the  Member  State 
where the taxable person is established; and that the place of storage be notified. 

5. 

MEASURES TO HELP TACKLE VAT FRAUD 

5.1. 

Chargeability of tax on intra-Community supplies 

The  Commission  has  already  proposed  shortening  the  time  period  for  which  the 
recapitulative  statement  is  submitted  from  three  months  to  one  month7.  This  is 
already a step towards Member States exchanging information more promptly, which 
should help tackle carousel fraud. 

However, the rules on the chargeability of tax on intra-Community supplies allow the 
taxable  person  to  delay  the  chargeability  of  tax  until  the  15th  day  of  the  month 
following the chargeable event. For instance, an invoice issued before the 15th of the 
month following the chargeable event establishes when the tax becomes chargeable. 
So  an  intra-Community  supply  taking  place  in  January  with  an  invoice  issued  in 
February but before 15 February allows the recapitulative statement to be declared in 
February and not January. 

Moreover,  the  Member  States  do  not  apply  the  rules  uniformly.  This  issue  has 
already  been  discussed  in  the  VAT  Committee  without  any  conclusions  being 
reached. The principal problem arises when an invoice is issued prior to the supply of 

7 

COM(2008) 147. 

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goods, with certain Member States treating this as the point at which the tax becomes 
chargeable while others do not. 

It would be preferable to set a single date on which the tax becomes chargeable, that 
of the date of the chargeable event, which is determined by the time of the supply. 
By  requiring  the  invoice  to  be  issued  by  the  15th  day  of  the  month  following  the 
chargeable  event,  the  invoice  will  still  remain  the  principal  document  proving  the 
intra-Community supply. Furthermore, the date of chargeability of the tax for intra-
Community  acquisitions  should  be  amended  so  as  to  correspond  with  the  intra-
Community supply. 

5.2. 

Right of deduction 

In  most  cases  a  taxable  person  exercising  a  right  of  deduction  must  hold  a  VAT 
invoice that was issued in accordance with the rules contained in the VAT Directive. 
There  are  exceptions  to  this  rule,  however,  notably  for  reverse  charge  transactions. 
Indeed in the Bockemühl8 case the court stated that holding a valid VAT invoice was 
not a formality that a Member State could impose on businesses exercising a right of 
deduction on a reverse charge supply. 

Despite these exceptions the taxable person making the supply is required to issue an 
invoice in accordance with the VAT Directive. This gives rise to a disparity between 
the requirement to issue an invoice as evidence of the supply and the requirement to 
hold an invoice to exercise a right of deduction.  

There should  be equal treatment  of the supplier  and the customer  in  terms  of these 
requirements.  At  the  same  time  that  the  supplier  is  required  to  issue  an  invoice  to 
prove the supply, the customer should be required to hold that invoice to exercise the 
right of deduction. As is the case now Member States may allow a right of deduction 
supported by other evidence if a valid invoice is not issued. 

6. 

OTHER SIMPLIFICATION MEASURES — CASH ACCOUNTING 

Certain  Member  States  have  authorisation  for  a  derogation9  regarding  the  time  at 
which the right of deduction can be exercised by taxable persons declaring the VAT 
under  an  optional  cash  accounting  scheme.  This  derogation  delays  the  right  of 
deduction for taxable persons in the cash accounting scheme until payment is made 
to their suppliers. 

It  is  proposed  to  extend  this  cash  accounting  simplification  measure  to  all  Member 
States.  

However,  where  the  supplier  only  accounts  for  VAT  on  receipt  of  payment,  a 
concession should be made for the recipient of those supplies to claim an immediate 
right of deduction. This  proposal creates a legal basis for  Member  States  to  further 
support businesses operating a cash accounting system. 

8 
9 

OJ C106, 30.4.2004, p. 7. 
Council Decision 2006/659/EC (OJ L 272, 3.10.2006, p. 15). 

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7. 

CONCLUSION 

For e-invoicing, the basic approach of using technology to ensure that an invoice is 
correct  is  removed.  Instead,  paper  and  e-invoices  are  to  be  treated  equally,  with 
reliance  on  the  invoice  details  being  assured  in  the  same  way  as  it  is  for  paper 
invoices today. 

The  proposal  significantly  reduces  the  number  of  options  available  to  Member 
States.  This  will  create  a  more  harmonised  set  of  EU  invoicing  rules  allowing 
businesses  to  fulfil  their  obligations  regarding  invoicing  more  easily.  Those 
businesses  involved  in  cross-border  transactions,  in  particular,  and  those  identified 
for  VAT  in  many  Member  States  should  see  a  reduction  in  the  burdens  placed  on 
them. 

For  small  and  medium-sized  businesses,  the  extension  of  the  use  of  simplified 
invoices  should  be  of  direct  benefit,  especially  in  relation  to  low  value  invoices. 
Moreover, a more harmonised set of EU rules will make compliance easier and the 
benefits of cross-border trade more attainable. 

Finally,  measures  have  been  put  in  place  to  enable  Member  States  to  exchange 
information  on  intra-Community  supplies  of  goods  faster.  This  complements  the 
Commission proposal to reduce the period of recapitulative statements, and is a key 
element in tackling intra-Community VAT fraud. 

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