EU ViDA Pillar Delays 2027-35

The EU’s VAT in the Digital age (ViDA) 3-pillared VAT reforms should receive the finance ministers final political agreement at the 14th May ECOFIN. We delve into the changes expecting confirmation and which proposals have been delayed by more than 2.5 years!

• Modification to the 10,000 EUR  threshold for B2C distance selling for goods & TBE services.
• Pillar 2: Platform Economy for ride & accommodation delayed from Jan 2025 to July 2027.
• Pillar 3: Single VAT Registration delayed from Jan 2025 to July 2027.
• Pillar 1: Digital Reporting Requirements (DRR) delayed from Jan 2027 to Jan 2030 to 2035.
• Separate proposal for quick fixes to the current e-commerce VAT rules and processes have been delayed or moved to the 2028 EU customs reforms.

Up first in a near 10-year plan for changes the EU plan to adjust the current rules set out in the 2021 E-commerce VAT package which includes modifying the current 10,000 EUR distance selling threshold for B2C goods and TBE services. The aim is for EU sellers to only be able to apply the threshold from their country of establishment. There is no threshold for non-EU sellers without a permanent establishment in the EU.

Plans to update various tax point rules. Moving supplies of natural gas, heating and cooling energy made cross-border to the OSS reporting and classified as distance sales.

Originally planned for January 2025 the platform economy proposal set out in Pillar 2 has now been delayed until July 2027 allowing governments and taxpayers much needed time to prepare their IT systems. These changes include;

•  Travel agents are to be excluded from the deemed supplier rules.
• In addition platform supplies are excluded from TOMS (Travel Operators Margin Scheme).
• Short-term accommodation, rental and road side sharing platforms will become the deemed supplier for VAT purposes shifting the responsibility meaning they will have to collect VAT on behalf of their underlying suppliers transactions.
• Some exceptions to this have been negoatiated allowing member states to exclude two types of underlying suppliers
  – Those who provide their own VAT number to the platform allowing them to recover input VAT against their output VAT and;
  – Those who use the new SME VAT registration special scheme for small enterprises from 2025.
• A major change from the original proposal to regularise rules between member states change the definition of “short-term” from 45 days to 30 days.

Also originally planned for January 2025 the introduction of a single EU VAT registration, something many businesses will be looking forward to has now been delayed until July 2027.

•  Extending the OSS return to include own stock movements across EU borders removing the need to report an acquisition in each country.
• OSS will be extended to also include supply and install goods/service, goods sold aboard ships, traing and aircrafts.
• The proposal to make the Import One Stop Shop (IOSS) mandatory for imported sales has been dropped from the proposal
• Call-off stock withdrawn as businesses will be able to use OSS instead. No new call-off stock arrangements may be used from 1st July 2027. Any goods transferred prior to this date will cease to apply from 30th June 2028.
• The proposal for marketplaces to become the deemed supplier for EU businesses will not go ahead. Marketplaces are already responsible for collecting the VAT on behalf of non-EU established sellers.
• The mandatory application of the non-resident B2B domestic reverse-charge (Article 194) rules will move forward but give more flexibility to member states such as applying the reverse-charge only when the customer is established in the MS where the VAT is due. Margin scheme supplies and works of art are excluded.

Digital reporting requirements will cover transactions of B2B supplies such as;

• Intra community supplies, acquisitions and B2B services
• Reverse-charge when the supplier is not established
• Supplies of energy to a taxable dealer
• Triangulation transactions

There have been some changes to the proposal to reduce the practical burdens for businesses;

• The deadline for reporting has been extended to 10 days from 2 days of the issuance of the e-invoice
• Additional information will be required including bank details to allow tax authorities to track payments
• Withdrawing of the ESL reporting since the DRR  regime will repalce this
• Domestic transaction reporting such as SAF-T will still remain an option

Mandatory structure for e-invoicing for DRR transactions

• Structured e-invoices based on Directive 2014/55/EU will become mandatory for any DRR transaction.
• A new definition of the EN16931 e-invoice standard will be included
• E-invoices to be issued 10 days after the chargeable event (originally 2 days) 
• Taxpayers may use third-party e-invoicing service providers to simplify the process for them

Member states have already invested heavily in already launched/planned domestic regimes so the EU have set a standard for domestic and EU e-invoicing requirements to be harmonised by January 2035