EU – New tax package and VAT-related reforms

With a view to achieving fair, efficient and sustainable taxation in the EU, on 15 July 2020 the European Commission adopted a new Tax Package. As part of the Tax Action Plan the Commission presented 25 new initiatives to be implemented by 2024 to make taxation fairer, simpler and better adapted to our digital world. Amongst others, the Commission announced the following VAT-related reforms:

  • modernising VAT rules to fit the online platform economy;
  • moving towards a single EU VAT registration system;
  • updating VAT rules on financial services;
  • improving the use of technology and information sharing between Member States to fight VAT fraud.

More information on this new tax package can be found here:

Hungary – changes to invoice real-time reporting as of 1 July 2020

Some of Essentia’s VAT life readers may already be aware of the existing Hungarian invoicing real-time reporting requirements. I.e. according to the existing rules, VAT-registered taxpayers in Hungary issuing invoices to other VAT-registered taxpayers in Hungary must electronically report to the Hungarian tax authorities the details of those invoices, on which the VAT amount is equal to or more than HUF 100.000 (approx. EUR 325). The reporting of the said invoices is made via a special invoicing software that automatically transmits the details of the qualifying invoices in XML format at the time of issue (real-time).

As of 1 July 2020 the HUF 100,000 threshold for the VAT element for the invoice to qualify for the real-time reporting requirement will be abolished, therefore all B2B invoices issued to Hungarian VAT-registered customers will need to be reported to the Hungarian tax authorities through the real-time invoicing software regardless of the value of the VAT included on the invoices. This means that the VAT exempt as well as the invoices falling with the domestic reverse-charge mechanism will also fall within the real-time reporting obligation.

Poland – VAT legislation to be changed in line with EU

Poland has formally amended its national VAT legislation in line with the EU quick fixes regulations only from 1 July 2020. However, before the formal adoption of those changes, at the beginning of the year the Polish Ministry of Finance announced that taxpayers had an option to either reply on the existing local VAT legislation in this matter or, alternatively, to directly apply the provisions of the EU VAT Directive in the interim period between 1 January – 30 June 2020.

Italy – quick fixes regulations

Italy has not yet fully implemented the quick fixes regulations, however the Italian tax authorities have recently published Circular 12/E (12 May 2020) to clarify the new EU proof of delivery requirements introduced by the quick fixes regime for zero-rating/exempting from VAT of intra-Community supplies of goods.