Brussels: Europe and the Arabs
It was announced in Brussels today, Tuesday, that the Council of the European Union member states had reached a political agreement on a new directive that paves the way for the introduction of an electronic tax certificate for value-added tax exemptions. A European statement quoted Hungarian Finance Minister Mihály Varga, whose country currently holds the rotating presidency of the Union, as saying, "As part of the EU's efforts to modernize its VAT systems, I am pleased that, following the VIDA package last month, we are taking another modernization step with this agreement on the electronic VAT exemption certificate, which will put an end to paper certificates that are signed by hand."
The directives will provide for an electronic certificate to replace the current paper certificate used when goods are exempt from VAT, for example because they are imported for embassies, international organizations or the armed forces. The exact electronic format, including the necessary IT specifications, will be discussed in expert groups and defined in the Commission's implementing regulations.
In a transitional period, member states will be able to use both electronic and paper versions.
Member states have submitted a number of amendments to the Commission's initial proposal. In particular, they defined the scope of the mandatory use of the electronic VAT exemption certificate in cases where two Member States are involved and the exemption is not granted by way of a refund.

The Council also added to the Directive a number of key elements of the future electronic certificate that the Commission will take into account when designing the harmonisation, in the text of the Directive. Furthermore, the Council shortened the transition period, originally planned to last 4 years (2026-2030), to just one year (2031-2032). The later start date should help the tax authorities to deploy the necessary technological developments in a timely manner, which will coincide with the significant investments needed to implement the VIDA package.

Next steps
The agreements will now undergo a technical and linguistic examination before being submitted to the Council for formal approval. The texts will then be published in the Official Journal of the European Union and enter into force.
It is worth noting that on 8 July 2024, the Commission published two proposals aimed at replacing the current paper VAT exemption certificate with an electronic VAT exemption certificate:

Proposal for a Council Directive amending Directive 2006/112/EC as regards the electronic VAT exemption certificate (Council Directive); -
Proposal for a Council Regulation amending Implementing Regulation (EU) No 282/2011 as regards the electronic VAT exemption certificate (Council Implementing Regulation).

The proposal to amend the VAT Directive creates the legal conditions for the Commission to develop the electronic certificate through implementing measures, while the proposal to amend the Implementing Regulation provides for the alternative use of both paper and electronic certificates during a transitional phase.

The Council today approved these two proposals. The European Parliament was consulted on the proposal for the Directive and issued its opinion on 13 November 2024.