On 12 February 2025, the EU Parliament plenary approved ViDA, following the November 2024 political agreement by member states’ Finance Ministers to the three-pillared reforms. This marks a major milestone in the European Union’s ongoing efforts to modernize its Value-Added Tax (VAT) system, aligning it with the digital economy and addressing modern tax challenges.
The VAT in the Digital Age (ViDA) package, which has been under development for over two years, introduces mandatory digital reporting requirements (DRR), e-invoicing, and new VAT rules for the platform economy, among other changes. These reforms are set to roll out in phases, culminating in full implementation by 2035.
This article explores the key aspects of the ViDA package, including:
- Single VAT Registration & OSS Expansion – Simplifying VAT obligations for cross-border businesses (July 2028)
- VAT Obligations for Online Platforms – Mandatory VAT collection for ride-sharing and accommodation platforms (January 2030)
- Comprehensive Digital Reporting & E-Invoicing Requirements – Transition to structured e-invoicing by 2030
- Impact on VAT Compliance & Fraud Prevention – Enhancing transparency and minimizing revenue losses
- Implementation Timeline & Next Steps – Key milestones leading up to 2035
1. Single VAT Registration & OSS Expansion (July 2028)
The ViDA package significantly expands the One-Stop Shop (OSS) system, making it easier for businesses engaged in cross-border trade to manage their VAT obligations through a single EU registration.
Key Reforms:
- From July 2028, OSS will cover B2B intra-community transactions, reducing the need for multiple VAT registrations.
- The new system will allow e-commerce and B2B businesses to manage VAT through a single return.
- The existing Import One-Stop Shop (IOSS) for B2C imported sales remains voluntary.
- Call-off stock arrangements will be phased out, and traders must use OSS for reporting intra-EU movements.
These changes are expected to save businesses billions in VAT compliance and administrative costs over the next decade.
2. VAT Obligations for Online Platforms (January 2030)
One of the most significant changes under the ViDA package is the new VAT liability for digital platforms. Under the updated rules, platforms facilitating short-term accommodation rentals and ride-sharing services will be considered deemed suppliers and required to charge and collect VAT on behalf of service providers in most cases where VAT is not currently applied.
Key Provisions:
- By January 2030, platforms must collect VAT on transactions where the underlying service provider does not charge VAT.
- The rule aims to level the playing field between digital platforms and traditional service providers who are already subject to VAT.
- SMEs may be exempted if a member state opts for a transition period of up to ten years.
- The definition of “short-term” rentals has been revised to 30 days (from the previous 45-day proposal) for consistency across member states.
These changes target significant distortions in VAT treatment, particularly in the gig economy, where services are often offered without VAT collection.
3. Comprehensive Digital Reporting & E-Invoicing Requirements (July 2030)
To combat VAT fraud and improve tax compliance, the ViDA package mandates a full transition to digital VAT reporting and structured e-invoicing across EU member states by July 2030.
Digital Reporting Requirements (DRR):
- B2B intra-community transactions must be reported digitally within 10 days of invoice issuance.
- Member states may develop their own technical reporting specifications while adhering to EU-wide standards.
- A new central VAT Information Exchange System (VIES) will be created, integrating DRR data with customs systems.
E-Invoicing:
- Mandatory structured e-invoicing for cross-border B2B transactions.
- The EN16931 standard will be updated to ensure harmonization across all member states.
- E-invoices will replace paper invoices for legal and tax reporting purposes in all DRR transactions.
- Taxpayers may use third-party e-invoicing providers, provided they comply with EU validation schemes.
These measures will streamline VAT compliance, reduce administrative burdens, and enhance fraud detection.
4. Impact on VAT Compliance & Fraud Prevention
The ViDA package is designed to tackle VAT fraud, which costs EU member states an estimated €11 billion in lost revenues annually.
Key Anti-Fraud Measures:
- Linking IOSS numbers to import consignments to prevent fraudulent use.
- Real-time digital transaction monitoring for cross-border VAT fraud detection.
- Improved transparency for businesses to verify transactions and prevent tax fraud risks.
- Elimination of customer consent for e-invoices, ensuring that businesses must accept digital invoicing.
These reforms will provide tax authorities with better oversight and significantly improve VAT collection efficiency.
5. Implementation Timeline & Next Steps
The ViDA package follows a phased rollout, with key milestones over the next decade.
Major Implementation Dates:
- March 2025: EU Council formal ratification expected.
- April 2025: Fiscalis Vienna workshop for implementation guidelines.
- July 2028: OSS expansion to include intra-community transactions.
- January 2030: VAT collection obligations for platforms become mandatory.
- July 2030: Digital Reporting Requirements (DRR) and e-invoicing fully implemented.
- January 2035: Full harmonization of domestic and intra-community transaction reporting.
By 2035, all EU member states must align their national e-invoicing frameworks with the ViDA digital reporting standards, ensuring a fully harmonized VAT system.
Conclusion: A New Era for VAT in the EU
The ViDA package represents one of the most comprehensive VAT reforms in EU history, aligning tax rules with digital transformation and modern business practices.
With mandatory e-invoicing, real-time digital reporting, and a unified VAT registration system, businesses will experience reduced administrative burdens, increased compliance efficiency, and streamlined VAT management. However, early adoption and preparation are crucial, as the new requirements will fundamentally change how businesses handle VAT obligations.
For companies operating in the platform economy, e-commerce, and cross-border trade, these reforms mark a significant shift toward digital tax compliance—and businesses must be ready to adapt.
