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European Council Agreed the Adoption of the Electronic VAT Exemption Certificate
On December 10, the European Council agreed on the directive which is aimed at replacing the existing paper VAT certificate for an electronic certificate that is used in certain cases when goods are to be exempt from VAT, for example because they are imported for embassies, international organizations or armed forces.
The Council included comments on key elements of the future electronic certificate that the Commission will take into account when designing its format. It also shortened the transition period from 4 years (2026-2030) to 1 year (2031-2032). The delayed starting date provides tax authorities with more time to complete IT infrastructure preparations, stipulated by the VIDA (VAT in the Digital Age) package.
The digital e-reporting procedure envisions that businesses will issue e-invoices for cross-border business-to-business transactions and automatically report the data to their tax administration. National tax administrations will share the data through a new IT system that will be capable of providing analyses of suspicious activities.
The draft certificate will go through technical and linguistic check before being presented to the Council for formal adoption. In a transitional period, member states will be able to use both electronic and paper versions.
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