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The European Data Protection Supervisor (EDPS) holds a prominent role within the wider European Commission’s infrastructure. As the name suggests, it monitors and helps to regulate the protection of personal data in the EU. It is unsurprising that the European Commission has sought the expertise of the EDPS in relation to the VAT in the Digital Age (ViDA) proposal. The ViDA proposal, in imposing additional e-reporting obligations on Member States, will immediately raise questions about the security and safekeeping of personal data. This becomes even more critical as the spotlight on data quality is set to intensify with yet further mandatory requirements for invoice data content in line with the proposal. Further to the EDPS’ review of the ViDA proposal, the European Commission has now published the summary of the previously published EDPS opinions concerning ViDA. 

The EDPS recommendations focus predominantly on the issue of data security and safekeeping to ensure the European data protection rules of individuals. These recommendations include, but are not limited, to the following: 

• The ViDA proposal should confirm all instances where data pertaining to an individual will be subject to further processing 
• The ViDA proposal should specify the specific obligations which will merit access to the personal data included in the central directory 
• The ViDA proposal should specify in a provision how long data can be retained and if so, how the data should be deleted after it is no longer required. 

The summary of the EDPS opinion can be found here: 

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.C_.2023.199.01.0005.01.ENG&toc=OJ%3AC%3A2023%3A199%3ATOC  

The full opinion can be found here: 

https://edps.europa.eu/data-protection/our-work/publications/opinions/2023-04-03-edps-opinion-council-directive-amending-directive-201116eu-administrative-cooperation-field-taxation_en  

The VAT in the Digital Age (ViDA) proposal has – understandably – spawned much debate about the effectiveness, feasibility and practicality of its application. Our previous post commented on the much-anticipated Economic and Financial Affairs Council (ECOFIN) conference which laid a platform to debate the ViDA proposals.  

Overall, ViDA has been applauded by EU Member States to nurture a less fragmented and harmonised e-invoicing topography. However, the convention did raise some concerns in respect of the proposal. 

While the overall sentiment of working towards a harmonised e-invoicing / e-reporting framework is encouraged, certain Member States felt that greater flexibility regarding domestic e-reporting should be considered.  

Pre-clearance remains a contentious issue, and the Commission will need to address whether basic, sparse checks- which can be viewed as synonymous with e-invoicing – are permitted. 

Finally, doubts were expressed around the 1 January 2028 date by certain Member States- which was deemed too soon to implement, given cost and development considerations. 

The convention, while wholly supporting the ViDA proposal, also unearthed some significant questions that the European Commission will need to address. 

The ECOFIN is expected to meet on 17 October 2023, with the aim of putting some finality with respect to some of the questions raised.  

Kofax has been following progress relating to the Carbon Border Adjustment Mechanism (or CBAM). You can read more about how the intended legislation works, and the motivations behind it, in our recent post here.  

Progress with regards to implementation appears to be on schedule. The European Commission to this effect issued the draft version of the Implementing regulation with respect to CBAM. 

The draft law includes extensive information, including: 

• Reporting obligations in respect of CBAM 
• Specific obligations during the transitional period  
• Guidance relating to specific materials subject to reporting obligations 

The report is detailed and comprehensive. Further information can be sought via the following link:  

EUR-Lex – Ares(2023)4079551 – EN – EUR-Lex (europa.eu) 

2022 and 2023 currently is witnessing a proliferation of measures relating to limiting single-use plastic, but more generic fiscal measures can also prove effective in fostering positive environmental behaviours. 

To incentivise recycling, the Czech Republic is advocating lower VAT rates for the use of recycled products, with the clear aim of promoting the purchase of recyclable products.  

To this effect, the Czech Republic has issued an application to the European Commission outlining its proposals. 

Notably, a specific potential reduced VAT rate has not yet been touted by the Czech government, indicating that the proposal still requires further definition.   

While the EU Commission has recently afforded Member States significantly increased autonomy to determine VAT rates, the reduced rate category, which can be applied with greater liberty, does not yet extend to products incorporating recyclable content. The proposal is therefore intended to stimulate not only a discussion pertinent to the Czech Republic specifically, but also more widely to other EU Member States, who may find themselves contemplating similar concerns at a future point. 

The Czech Republic’s proposal to the European Commission can be located below: 

pdf (europa.eu) 

The Czech Republic is a compliant territory for Kofax. We will support any new VAT rates confirmed further to this proposal as part of our e-invoicing solution. 

In accordance with the initial schedule, mandatory B2G obligations in Belgium were intended to pre-date the upcoming B2B obligations. However, delays to the B2G implementation schedule means B2G obligations may ‘collide’ or at least come relatively close to B2B obligations in the country.  

Draft legislation suggests that the obligation for economic operators to send their invoices electronically for public contracts with an estimated value of less than EUR 30.000 will only now be effective from 1 March 2024.  

This obligation to send invoices electronically in the context of public contracts does not apply to public contracts whose estimated value is less than or equal to EUR 3.000. However, contractual clauses can make this a more definitive requirement.  

Additionally, from 1 March 2024, the federal contracting authorities will also impose electronic invoicing below EUR 3.000. 

The Belgium Council of State will now consider the draft. 

The official publication is available on the following website and provides further information:  

https://news.belgium.be/nl/wijzigingen-inzake-de-borgtocht-en-de-elektronische-facturering-van-overheidsopdrachten 

You can also read more about Belgium’s B2B e-invoicing and e-reporting mandate via our dedicated country-specific page here. 

Serbia’s drive to review and enhance its e-invoicing practices continues, further to Serbia’s recent e-invoicing upgrade to a newer version. 

The Serbian Ministry of Finance has now updated and released the following documents: 

• Rulebook on electronic invoicing https://www.efaktura.gov.rs/vest/1911/donet-pravilnik-o-elektronskom-fakturisanju.php 
• Internal Technical Manual (16.06.23) https://www.efaktura.gov.rs/tekst/360/interno-tehnicko-uputstvo.php 
• Instructions for using XML files (05.06.2023) https://www.efaktura.gov.rs/tekst/324/uputstvo-za-koriscenje-xml-datoteka.php 

The Rulebook on e-invoicing takes effect as from 1 July 2023. 

You can read more about e-invoicing in Serbia on our dedicated country-specific page here. 

Aside from the critical upcoming e-invoicing mandate that Kofax is supporting, the Polish government is also in the process of consolidating several other fiscal initiatives under a single package.  

The package, referred to as Slim 3, has now been signed into law. You can read more about Slim 3 and the measured contained within it on our dedicated country-specific page here. 

Our recent post commented on the Scottish Deposit Return Scheme, which ambitiously strives to encourage recycling by imposing a deposit on single-use drinks containers.   

This was originally envisaged to go live in August 2023 but has now been delayed to 1 October 2025.  

Kofax will monitor developments in relation to the scheme and consider our obligations in respect of it. 

The introduction of new VAT rates are not the only changes countries deploy as part of their fiscal strategies. Less radical measures, such as re-classifying specific goods and services under existing tax rates, also serve as an equally effective measure.  

Finland is re-classifying the following good and services, in line with the following: 

Goods / services now subject to 14% (up from 10%): 

• Books 
• Hotel services 
• Public transport 
• Pharmaceuticals  
• Entrance to cultural and sporting events  
• Film screenings 
• Royalties for television and public radio activities 

Goods / services now subject to 24% (up from 14%): 

• Specific feminine hygiene products  
• Specific products for baby care 

Kofax’s e-invoicing solution already accommodates all valid rates for Finland, a compliant territory, as part of our e-invoicing solution.  

Switzerland’s plans to introduce new VAT rates in 2024 are accelerating, but these are not the only changes forecast for what is projected to be a congested January 2024 with respect to its fiscal calendar.  

Alongside new tax rates, the Swiss Federal Council is acceleration the automation of its fiscal procedures, by mandating that VAT registrations and VAT returns must be submitted electronically from 1 January 2024. 

This obligation builds on an already strong electronic culture in the country, where most VAT returns are submitted electronically, therefore signalling Switzerland’s firm intention to cement this within its legislative framework.