ViDA package finally adopted by the European Council
The ViDA (VAT in the Digital Age) package, recently adopted by the European Council, marks a significant overhaul in the EU's approach to VAT compliance, aimed at modernizing the tax system in line with the digital economy. This package introduces new measures designed to streamline VAT processes, increase tax compliance, and tackle VAT fraud across the EU. Here are some of the main points:
Real-Time Digital Reporting Requirements: ViDA mandates real-time reporting of VAT for cross-border transactions. This move replaces the existing EC Sales List (ESL) with a unified digital system that facilitates faster VAT collection and reporting for businesses across the EU. Member states will now have access to transaction data more rapidly, enhancing tax transparency and enabling quicker fraud detection.
Extension of the One-Stop-Shop (OSS): The OSS, initially introduced to simplify VAT collection for e-commerce, will expand to cover all B2B and B2C transactions within the EU. This means that businesses will be able to report and pay VAT through a single EU-wide system, reducing administrative burdens for companies operating in multiple EU countries.
Platform Economy Rules: ViDA brings VAT obligations to digital platforms that facilitate certain services (e.g., short-term accommodation, ride-hailing). Platforms will now be liable for collecting and remitting VAT on behalf of providers that may not be registered for VAT, ensuring compliance in the fast-growing platform economy.
Simplification for Small Businesses: The package includes provisions to help smaller businesses comply with VAT rules, such as reduced reporting requirements and clearer guidelines, which should reduce barriers to cross-border trade.
The implementation of ViDA will proceed in phases, with the goal of completing the rollout by 2028. It represents a major step toward a more digital, unified VAT system in the EU, which could serve as a model for other regions looking to modernize tax processes in the digital economy.
Currently, e-invoicing in the EU requires the buyer’s consent—meaning a supplier can only send an e-invoice if the buyer agrees, or if there is a national e-invoicing mandate. With the ViDA directive, buyer acceptance will no longer be required, facilitating e-invoicing adoption.
Member states will have the freedom to introduce new e-invoicing mandates without needing to request an EU-level derogation. This change should lead to more B2B e-invoicing mandates being announced and implemented by EU countries in the coming years.
Beginning July 1, 2030, cross-border e-invoicing and e-reporting will become mandatory within the EU
The European Norm (EN) 16931 will serve as the default invoice standard for all transactions, both domestic and cross-border.
Starting in 2035, all e-invoicing and e-reporting systems across EU member states must be harmonized, likely based on a five-corner DCTCE model.
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