Directive 2025/516 - Amendment of Directive 2006/112/EC as regards VAT rules for the digital age - Main contents
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official title
Council Directive (EU) 2025/516 of 11 March 2025 amending Directive 2006/112/EC as regards VAT rules for the digital age| Legal instrument | Directive |
|---|---|
| Number legal act | Directive 2025/516 |
| Regdoc number | ST(2024)15342 |
| Original proposal | COM(2022)701  |
| CELEX number i | 32025L0516 |
| Document | 11-03-2025; Date of adoption |
|---|---|
| Effect | 14-04-2025; Entry into force Date pub. +20 See Art 7 |
| End of validity | 31-12-9999 |
| Transposition | 14-04-2025; Application See Art 6.1 31-12-2026; Adoption At the latest See Art 6.2 01-01-2027; Application See Art 6.2 30-06-2028; Adoption At the latest See Art 6.3 01-07-2028; Application See Art 6.3 30-06-2029; Adoption At the latest See Art 6.4 01-07-2029; Application See Art 6.4 01-01-2030; Application At the latest See Art 6.3 30-06-2030; Adoption At the latest See Art 6.5 01-07-2030; Application See Art 6.5 01-01-2035; Application See Art 6.5 |
Official Journal of the European Union |
EN L series |
2025/516 |
25.3.2025 |
COUNCIL DIRECTIVE (EU) 2025/516
of 11 March 2025
amending Directive 2006/112/EC as regards VAT rules for the digital age
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union, and in particular Article 113 thereof,
Having regard to the proposal from the European Commission,
After transmission of the draft legislative act to the national parliaments,
Having regard to the opinion of the European Parliament (1),
Having regard to the opinion of the European Economic and Social Committee (2),
Acting in accordance with a special legislative procedure,
Whereas:
(1) |
The rise of the digital economy has significantly impacted the operation of the Union system of value added tax (VAT), as it is unsuited to the new digital business models and does not allow for the full use of the data generated by digitalisation. Council Directive 2006/112/EC (3) should be amended to take account of that evolution. |
(2) |
The VAT reporting obligations should be adapted to address the challenges of the platform economy and to reduce the need for multiple VAT registrations in the Union. |
(3) |
The ‘VAT gap’ is the overall difference between the expected VAT revenue based on VAT legislation and ancillary regulations and the amount actually collected. In 2020, the VAT gap was estimated at EUR 93 billion in the Union. A significant part of the VAT gap consists of fraud, in particular missing trader intra-Community fraud, estimated in the range of EUR 40–60 billion. In the report on the final outcome of the Conference on the Future of Europe, which was published in May 2022, citizens called for measures to harmonise and coordinate tax policies within the Member States in order to prevent tax evasion and avoidance, as well as measures to promote cooperation between Member States to ensure that all companies in the Union pay their fair share of taxes. The VAT in the Digital Age initiative is consistent with those goals. |
(4) |
In order to increase tax collection on cross-border transactions and to end the existing fragmentation stemming from the implementation by Member States of divergent reporting systems, rules should be laid down for Union digital reporting requirements. Such rules should ensure the provision of information to tax administrations on a transaction-by-transaction basis, in order to allow for the cross-matching of data, increase the control capabilities of tax administrations and create a deterrent effect with regard to non-compliance, while reducing compliance costs for businesses operating in different Member States and eliminating barriers within the internal market. |
(5) |
To facilitate the automation of the reporting process for both taxable persons and tax administrations, the transactions to be reported to tax administrations should be documented electronically. The use of electronic invoicing should become the default system for issuing invoices. Nevertheless, Member States should be allowed to authorise other invoices for domestic supplies. |
(6) |
In order to maximise interoperability, electronic invoices should in principle comply with the European standard laid down in Commission Implementing Decision (EU) 2017/1870 (4) (‘the European standard’), which fulfils the request made by the Commission pursuant to Article 3(1) of Directive 2014/55/EU of the European Parliament and the Council (5) to create a European standard for the semantic data model of the core elements of an electronic invoice. However, Member States should still be able to allow for other standards for domestic supplies. |
(7) |
The Member States competent for laying down the invoicing rules should take measures, which could... |
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