Latest updates on ViDA, VAT in the Digital Age

by | Jan 28, 2025 | E-invoicing

Update from February 21, 2025

The European Commission is determined to fight tax fraud and has come up with the ViDA (VAT in the Digital Age) proposal to support this will. This blog article is here to keep you updated on the latest developments and votes and is going to be updated on a regular basis.

ECOFIN

It is useful to know that discussions around ViDA occurs during the ECOFIN Council, usually once a month, the latest has been held on January 21st 2025, now under the Polish Presidency.

The main objective will be to “meet the challenge of the EU’s declining competitiveness”. The Polish Presidency wants to achieve a stronger economy by streamlining the single market.

As far as our ViDA subject is concerned, ECOFIN validated the three pillars of the proposal on November 5, 2024, under the Hungarian presidency. A compromise satisfactory to all 27 member states was reached after months of negotiation.

On February 12, 2025, the European Parliament approved the draft Council directive amending Directive 2006/112/EC as regards VAT rules for the digital age. The draft requires final political approval from Council of the European Union. The report on the draft Council directive amending Directive 2006/112/EC as regards VAT rules for the digital age ia availble here.

The 3 Pillars of ViDA

As we’ve developed an article on the most common questions about ViDA, this section is going to focus on a more technical point of view with the specific rules that are discussed during the council.

To summarize, ViDA is developed around 3 main pillars:

Electronic Invoicing and Reporting (DRR)
As ViDA aims to fight tax fraud and reduce the VAT Gap, the proposal implements the so-called DRR – Digital Reporting Requirements – to get a real-time view on invoices that are exchanged cross-border in the EU.This first pillar implies a common standard (EN16931) for the e-invoices that are going to be issued, with specific information that should appear within the invoice.

Online Platforms
This part is targeting short-term accommodation rental and passenger transport through platforms (e.g. Uber or AirBnB).With the new rules, “Member States should put at the disposal of the taxable persons the necessary means for such transmission”. It will simplify the process for SMEs and individual service providers. Finally, it is promoted as “fairer” in regard to small companies that may have a heavy administrative burden related to their tax collection.

Single VAT Registration
The One Stop Shop (OSS) will represent the decentralized model that is considered for ViDA. It will allow a Single VAT Registration number, simplifying administrative work for companies who will register only once to fulfill their VAT obligations all over Europe.

What is changing

  • E-invoicing is becoming the default system
    • But States can have other invoicing means for domestic transactions
  • Standard EN16931 is mandatory to issue e-invoices
    • Hybrid formats should be accepted as well
  • E-invoices must be issued 10 days max after the sale
  • VAT reporting will occur through the DRR for cross-border supplies of goods and services
    • It needs to happen in real time
  • Domestic transactions are not (yet) ruled by the EU VAT Directive

What are the deadlines

July 1st, 2030 seems to be the new deadline to be compliant with the DRR, Member States must adopt the necessary laws to comply with the directive.

State Members that have already implemented a VAT control in their country (i.e.: France, Italy, Poland) January 1st, 2035 to adapt their systems to meet the new requirements.

Why is it so important

As we developed the topic on previous blogs, we are putting forward the main goals communicated by the EU:

  • Harmonize the EU’s VAT rules
  • Reduce administrative work for companies
  • Reduce the VAT Gap
  • Increase the VAT accuracy

SPS Commerce, as an international service provider, can only encourage you to switch to e-invoicing now. Trusting one of the leaders on the market will help you be compliant with all VAT regulations, may they be local, international or in construction such as the ViDA proposal.

Aleksandra Vovchenko
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