VAT invoicing rules contained in the Principal VAT Directive (2006/112/EC) was carried out for the European Commission by PricewaterhouseCoopers and has now been published on the Commission's web-site. The study examines the four principal areas of invoicing - the requirement to issue an invoice, the content of an invoice, electronic invoicing, and the storage of invoices - with a view to mapping the existing legislation in all Member States; analysing burdens on business and Member States' control needs; and providing recommendations for a more harmonised and modern set of VAT invoicing rules. Legislative proposals, based on the study, are expected within the next few weeks.
Art 237 of the Principal VAT Directive (2006/112/EC) requires that, “the Commission shall present, at the latest on 31 December 2008, a report and, if appropriate, a proposal amending the conditions applicable to electronic invoicing in order to take account of future technological developments in that field”.
Based on the results of an initial consultation exercise, the Commission concluded that the current VAT invoicing rules did not achieve its aims of simplicity and harmonisation, and that businesses would welcome the removal of some options available to Member States. In particular, conditions relating to self-billing, summary invoices, and electronic storage were seen as excessive, in that they increased compliance costs and deterred businesses from utilizing these options. Respondents also indicated that equal treatment of paper invoices and e-invoicing would provide them with the opportunity to become more efficient and reduce costs.
Against this background, the Commission selected PricewaterhouseCoopers to perform an independent study, to give the Commission an objective analysis of the current situation and the needs of all the stakeholders. The study is likely to form the foundation of the Commission's report, and potential proposal, for changes to the Principal VAT Directive, with the aim of reducing burdens on businesses and encouraging the use of electronic invoicing and electronic archiving.
The overall objective of the study, and the resulting report, was to review whether, for the four principal areas of invoicing, improvements can be made to the legislation in order to further harmonise and modernize the invoicing rules, thereby reducing burdens on business and encouraging the use of electronic invoicing.
The four principal invoicing areas examined are:
- the requirement to issue an invoice, including self-billing and outsourcing;
- the content of an invoice;
- electronic invoicing; and
- the storage (archiving) of invoices.
Besides the four main invoicing areas, the study also considered other parts of the VAT Directive that interact with the invoicing requirements, and which could possibly create problems or ambiguities.