The European Commission’s “VAT in the Digital Age” (ViDA) package is set to revolutionize the EU’s VAT system, aiming to modernize, simplify, and combat fraud in the digital economy. Formally adopted on March 11, 2025, with legislative texts published on March 25, 2025, these changes will be progressively rolled out until 2035. This comprehensive package focuses on three key pillars: Digital Reporting Requirements (DRR) through mandatory e-invoicing, updated VAT rules for the platform economy, and expanding the One-Stop Shop (OSS) for simplified VAT registration.
Understanding these upcoming EU VAT changes is crucial for businesses operating within the EU. This article provides an essential timeline of ViDA package updates, helping you prepare for the new era of EU VAT compliance.
Key Pillars of the ViDA Package:
- Digital Reporting Requirements (DRR) and Mandatory E-invoicing: Shifting from traditional invoicing to standardized e-invoicing and near real-time digital reporting for cross-border transactions.
- VAT Rules for the Platform Economy: Introducing “deemed supplier” rules for platforms facilitating short-term accommodation rentals and passenger transport services, making platforms responsible for VAT collection.
- Single VAT Registration: Expanding the existing One-Stop Shop (OSS) and Import One-Stop Shop (IOSS) schemes to reduce the need for multiple VAT registrations across EU Member States.
Timeline of ViDA Package Changes:
Initial Proposal by European Commission
The European Commission formally presented its "VAT in the Digital Age" package, outlining the ambitious plans for modernizing the EU VAT system.
Member States Agree on ViDA Package
The Economic and Financial Affairs Council (ECOFIN) meeting saw Member States unanimously agree on the adoption of the ViDA package, moving it closer to formal approval.
European Parliament Approves ViDA Proposal
The European Parliament gave its approval to the ViDA proposal, signifying strong political support for the reforms.
Formal Adoption of the ViDA Package
The Council of the European Union formally adopted the VAT in the Digital Age (ViDA) package, concluding the legislative approval process.
Publication in the EU Official Journal
The legislative texts of the ViDA package were officially published in the Official Journal of the European Union.
First Reforms Go Live / Immediate Changes
- E-invoicing Freedom: Member States can mandate domestic e-invoicing without EU Council approval.
- Recipient Must Accept E-invoices: No prior agreement needed for cross-border e-invoicing.
Single VAT Registration & OSS Expansion (Phase 1)
- OSS Extension to Energy Supplies
- Clarifications for OSS and IOSS
Platform Economy & Single VAT Registration (Phase 2)
- Deemed Supplier Rule for Platforms
- New Place of Supply Rule
- Expansion of OSS for Own Goods Transfers
- Mandatory Reverse Charge Mechanism
Mandatory Deemed Supplier Rule for Platforms
Platforms must remit VAT for rentals and transport in Member States that postponed.
Mandatory E-invoicing & Digital Reporting
- Cross-border B2B E-invoicing
- Real-time Digital Reporting (DRR)
- Abolition of EC Sales List
- Harmonized Domestic Systems
- Permitted Summary Invoices
Final Alignment of Domestic Systems
All Member States must align their domestic e-reporting systems with EU standards.
Preparing Your Business for ViDA
The VAT in the Digital Age package represents a significant overhaul of the EU VAT system. While some changes are still years away, businesses should start preparing now. Key considerations include:
- System Upgrades: Assess your current accounting and ERP systems for compatibility with new e-invoicing and digital reporting requirements. Significant IT investments and integrations may be necessary.
- Process Re-engineering: Review and adapt your internal processes for invoicing, reporting, and VAT compliance to align with the new rules.
- Data Management: Ensure your data collection and management systems are robust enough to handle the increased granularity and real-time nature of the new reporting obligations.
- Platform Compliance: If your business operates as a digital platform facilitating accommodation or transport, understand your new “deemed supplier” obligations and adjust your business model accordingly.
- Cross-functional Collaboration: Foster strong collaboration between your finance, tax, legal, and IT departments to ensure a smooth transition and compliance.
- Stay Informed: Continue to monitor updates from the European Commission and national tax authorities, as Member States transpose the directive into national law.
The ViDA package aims to create a more efficient, transparent, and fraud-resistant VAT system across the EU. Proactive preparation will be key to minimizing disruption and leveraging the benefits of these modernised EU VAT rules.
