VAT Modernisation | RSM Ireland

It was recently announced during Budget 2024 that Irish Revenue have launched a public consultation on the digital modernisation of the VAT system, with focus on the reporting of transactions on a real, or near real, time basis, supported by mandatory e-invoicing.

Key considerations:

Revenue consultation on VAT modernisation in the area of real time reporting and e-invoicing is open to key stakeholders until Friday 12 January 2024.
This follows on from EU Commission's proposals in December 2022 regarding VAT in the Digital Age.
Aim is to harmonise VAT real time reporting across Europe and improve the VAT compliance burden for business.

Who will be impacted?

Reporting transactions on a real, or near real, time basis will apply to Business to Business (“B2B”) and Business to Government (“B2G”) supplies. The real time reporting will be supported by mandatory e-invoicing. Business to Consumer (“B2C”) transactions are not currently within the scope of the current public consultation. Where disputes do arise, we can assist through the provision of mediation and facilitation services with a view to empowering parties to reach alignment on a path to move forward. In circumstances where mediation and facilitation are not appropriate, we offer a full range of independent investigation services which are efficient, transparent and most importantly robust.

Interaction with other EU Member States
This follows on from proposals released by the EU Commission in late 2022 with regard to VAT in the Digital Age (“ViDA”) which notes proposals for mandatory e-invoicing on cross-border supplies of goods and services within the EU as well as an obligation for transaction level data to be reported within 48 hours of the invoice date of a supply.

The ViDA proposals are due to take effect from 1 January 2028 and currently remain subject to negotiation and unanimous approval at EU Council level.

While a number of EU and non-EU jurisdictions have to date introduced real time VAT reporting, e-invoicing rules or in some cases, both, the ViDA proposals aim to provide for mandatory EU wide digital VAT accounting with harmonisation of its application across all EU Member States. The aim of this modernisation programme is to improve the accuracy and transparency of VAT reporting, ensure a consistent approach across EU Member States and help with the reduction of VAT fraud currently experienced throughout the EU.

Expected benefits for businesses
Following the introduction of real time VAT reporting, the expectation is that compliant taxpayers should find their VAT compliance obligations become less onerous – it will become easier to submit VAT return, less time is spent dealing with Revenue compliance interventions and refunds are processed in a more timely manner. From a Revenue perspective, real time reporting should be helpful in detecting suspicious transactions early on and help in the reduction of VAT fraud.

What next?

The purpose of the consultation, which is open until Friday 12 January 2024, is to get the views and perspectives of relevant stakeholders (businesses, accounting software providers, professional service providers, industry representative bodies, etc.) in advance of the introduction of real time digital reporting and e-invoicing for relevant business. We would encourage as many businesses as possible to engage in the process, to ensure views and concerns faced by your business, and other businesses, are considered.