Up till now, rules on invoicing value-added tax (VAT) have been so complicated that they have hampered the use of electronic invoices in trading across borders. To allow businesses to save expenses and ease administrative burdens, the Ecofin Council on 16 March reached a general agreement on a directive aimed at modernising VAT invoicing requirements

The Ecofin Council adopted a directive that will help businesses to simplify the procedure of VAT invoicing in their last meeting of 16th March. It is estimated that the new instrument can reduce the industry's charges by up to 18 billion euros annually. This measure is part of the Better Regulation Strategy, aimed by the European Union. It is a core component of Europe's response to the economic and financial crisis.

In this respect, the Commission adopted in January 2009 the proposal for the revision of the VAT Directive to remove the barriers to electronic invoicing, which has now been adopted.

It will be of particular help to small and medium-sized enterprises (SMEs), as simplified invoices will be extended to include those for smaller amounts. Furthermore, it will allow SMEs to account for VAT on a cash basis. Paper and electronic invoices will be treated equally. Rules on storing of information and recording periods will be harmonised. The directive should boost electronic commerce.

The proposal also includes measures to help tax authorities tackle VAT fraud, as EESC proposed. Rules on VAT (Value Added Tax) deduction will be tightened to enable speedier exchange of information on supply of goods and services internally in the EU. As businesses operating cross-border will have to report their transactions in the month of the supply, carousel fraudsters will not be able to abuse the possibility of including an invoice in a later reporting period.