Select Committee on European Scrutiny Third Report


COM(00) 650

Draft Directive amending Council Directive 77/388/EEC with a view to simplifying, modernising and harmonising the conditions laid down for invoicing in respect of Value Added Tax.

Legal base: Article 93 EC; consultation; unanimity
Document originated: 17 November 2000
Forwarded to the Council: 17 November 2000
Deposited in Parliament: 7 December 2000
Department: HM Customs & Excise
Basis of consideration: EM of 19 December 2000
Previous Committee Report: None
To be discussed in Council: No date known
Committee's assessment: Politically important
Committee's decision: Not cleared; further information requested


  8.1  The current EC VAT invoicing rules are set out in Article 22 of the Sixth VAT Directive 77/388. They set out minimum requirements only and do not reflect recent technological developments and commercial practices, particularly the issuing of invoices by electronic means. The diversity across the Community and restrictions in some Member States may be affecting competitiveness and slowing the development of electronic commerce generally. A Commission study in 1999 concluded that Community legislation should include a harmonised list of statements to be included on every invoice and should explicitly authorise electronic invoicing.

The document

  8.2  Based on the 1999 study, the Commission now proposes amendments to Article 22 of the Sixth Directive to update and standardise current VAT rules for paper invoices across all Member States and to introduce new common rules on electronic invoicing.

The Government's view

  8.3  In her Explanatory Memorandum of 19 December 2000, the Paymaster General (Dawn Primarolo) says that the Government broadly supports the main aim of the proposal to simplify and standardise VAT invoicing rules. She says:

    "The proposals are intended to facilitate the growth of e-commerce and are consistent with the Government's view that changes to the current EC VAT system should focus on simplifying and modernising the tax. The overall objective should be to devise a harmonised system which imposes the same obligations for paper-based and electronic systems, and which makes no distinction between inland and cross-border transactions.

    "UK invoicing rules are currently among the least burdensome within the EU. We already allow invoicing by electronic means and provide for simplifications such as customer self-billing and outsourcing of invoicing as well as the issue of less detailed invoices for certain transactions. The impact of the proposed changes may not therefore be as significant in the UK as in other Member States. The proposals are being examined in detail and will be discussed with our EC partners and business...

    "In terms of cost to business, the proposal will impact upon the number of data elements required on invoices, rules for e-invoicing (including the adaptation of invoicing software programmes as necessary) and storage requirements. However these costs should be balanced by lower administrative costs and benefits of e-invoicing, particularly for those UK businesses operating in other Member States".

  8.4  The Minister says that a Regulatory Impact Assessment will be undertaken in the spring and the financial impact on trade and government administration will be clearer upon its completion.


  8.5  We report on this proposal because it is an important administrative development affecting the whole of the business community. It would replace what are at present minimum requirements only with new and harmonised procedures. We note the Government's general support for the proposal. The Minister also says that United Kingdom invoicing rules are currently among the least burdensome within the European Union. However, it will be important to ensure that the harmonised requirements adopted place the least possible extra bureaucratic requirements on United Kingdom business, notwithstanding the compensating advantages to which the Minister draws attention. We note that a Regulatory Impact Assessment is being conducted in the spring. We ask the Minister to provide us with a copy of this in due course and, at the same time, to tell us what views have been expressed by business interests in the United Kingdom. Meanwhile, although we have no questions to ask at this stage, we leave the document uncleared.

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Prepared 6 February 2001