On December 10, 2024, the Council reached a political agreement on the European Commission’s proposal to introduce an electronic VAT exemption certificate.
Key Features of the New Directive
The directive aims to replace the current paper-based VAT exemption certificate with a digital version. This electronic certificate will apply to goods exempted from VAT, such as those imported for embassies, international organisations, or armed forces.
Amendments to the original proposal limit the mandatory use of the electronic certificate to cases involving two Member States where exemptions are not granted via refunds. Member States will have a one-year transitional period to adapt their systems to the new requirements.
Next Steps
The agreements will undergo technical and linguistic reviews before being formally adopted by the Council. Once approved, the texts will be published in the EU’s Official Journal and come into effect.
Simplifying Tax Procedures and Reducing Costs
The introduction of an electronic VAT exemption certificate is designed to simplify tax processes and reduce administrative burdens for businesses. By enabling the use of advanced electronic signatures and aligning with digital administrative systems, the new system will increase flexibility, reduce costs, and improve the management of VAT exemptions across the EU.
Background
On July 8, 2024, the Commission presented two proposals to transition from paper to electronic VAT exemption certificates. The Council has now agreed on these proposals, following the European Parliament’s opinion issued on November 13, 2024.