Proposal: Reduced VAT Rates on Recycled Products

The Council of the European Union has issued a note with a proposal for the introduction of a lower VAT rate for some products that are composed in a certain degree by recycled content.

Proposal: Simplification of the VAT Rules for E-commerce

The proposal aims to remove the restrictions that are currently bound to the EUR 150 threshold, including notably the following measures:

• Extension of the Import One-Stop Shop (IOSS) scheme to all distance sales of imported goods regardless of the respective value (i.e., removal of the EUR 150 threshold).
• Extension of the deemed supplier rule to all distance sales of imported goods that are facilitated by an electronic interface, regardless of the respective amount.
• Extension of the special arrangements for declaration and payment of VAT to all distance sales of imported goods, regardless of their value.

If approved, these measures are expected to apply as from 1 March 2028.

European Court of Justice, Case C-232/22, “Cabot Plastics Belgium SA v. État belge”: Concept of Fixed Establishment and Provision of Tolling and Ancillary Services

The European Court of Justice (ECJ) has ruled that Article 44 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2008/8/EC of 12 February 2008, and Article 11 of Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112, must be interpreted as meaning that a taxable person receiving services, whose business is established outside the European Union (EU), does not have a fixed establishment in the member state in which the provider of the services concerned—which is legally independent from that recipient—is established, where that recipient does not have a suitable structure in terms of human and technical resources capable of constituting that fixed establishment, even where the taxable person providing the services provides to that taxable person receiving services, pursuant to an exclusive contractual undertaking, tolling services and a series of ancillary or additional services, contributing to the business of that taxable person receiving services in that member state.

European Court of Justice, Case C-108/22, “C. Sp. z o.o. (in liquidation) v. Dyrektor Krajowej Informacji Skarbowej”: Travel Agents Scheme on Resale of Accommodation Services

The ECJ has ruled that Article 306 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, must be interpreted as meaning that the service provided by a taxable person, which consists in purchasing accommodation services from other taxable persons and reselling them to other economic operators, is covered by the special value added tax scheme applicable to travel agents, even though those services are not accompanied by ancillary services.

European Court of Justice, Case C-615/21, “Napfény-Toll Kft. v Nemzeti Adó”: Suspension of the Statute of Limitations of the Right of the Tax Authority to Assess Tax

The ECJ has ruled that the principles of legal certainty and effectiveness of EU law must be interpreted as not precluding legislation of a member state or the related administrative practice, under which, in relation to value added tax, the limitation period in respect of the right of the tax authorities to assess that tax is suspended for the whole duration of judicial review, regardless of the number of times the administrative tax procedure has had to be repeated following those reviews and with no ceiling on the cumulative duration of the suspensions of that period, including in cases where the court ruling on a decision of the tax authority concerned taken as part of a repeat procedure, following on from an earlier court decision, finds that that tax authority failed to comply with the guidance contained in that court decision.

European Court of Justice, Case C-344/22, “Gemeinde A v Finanzamt”: Provision of SPA Facilities by a Municipality Outside of Scope of VAT When Tax Collected Is Linked to a Tourist Tax

The ECJ has ruled that Article 2(1)(c) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that the provision of spa facilities by a municipality does not constitute a “supply of services for consideration,” within the meaning of that provision, where, on the basis of municipal by-laws, that municipality imposes a spa tax of a certain amount per day’s stay on visitors staying in the municipality, when the obligation to pay that tax is linked not to the use of those facilities but to the stay in the municipal territory and those facilities are freely and gratuitously accessible to everyone.

Germany Authorised to Introduce Mandatory Electronic Invoicing for Business-to-Business (B2B) Transactions

The EU has authorised Germany to implement mandatory electronic invoicing for B2B transactions as from 1 January 2025, until 31 December 2027 (or until the implementation of the VAT rules for the digital age). This requirement will not apply to non-established taxable persons.

Romania Authorised to Extend Mandatory Electronic Invoicing for B2B Transactions

The EU has authorised Romania to extend the application of mandatory B2B e-invoicing until 31 December 2026.