VAT in the Digital Age (VIDA) Update: E-invoicing and Digital Reporting

In short: EU Digital Reporting Requirements (DRR) make e-invoicing the default for intra-EU B2B supplies of goods and services. Under the EU proposal, businesses would issue and receive e-invoices and report each transaction within two days. DRR aims to replace filings such as EC Sales Lists.

Update: The EU adopted the final ViDA rules in March 2025, and DRR for intra-EU B2B transactions now applies from 1 July 2030 rather than 2028.

The EU has announced that from January 1, 2028, EU Digital Reporting Requirements (DRR) will become mandatory for all businesses that make intra-EU supplies of goods and services. We cover this in more detail in Spain Set to Implement Mandatory B2B E-Invoicing by July 2025.

This means all businesses making intra-EU B2B supplies will have to issue and receive e-invoices. They will also have to report these transactions within two days of issuing the VAT invoice.

The EU hopes DRR will bring standardisation across the EU. It should also improve data quality, availability and accessibility, and put more focus on standards. Some member states already require e-invoicing (for example, Hungary and Spain). They will need to make sure their processes fit a longer-term vision of complete convergence.

Ultimately, the vision is that DRR will replace other filings such as EC Sales Lists, formally known as ‘recapitulative statements’.

What challenges will the new DRR mandate bring for businesses?

• Keeping up to date with ever more complex reporting requirements.
• Maintaining multiple reporting tools across many territories, which will be both complex and expensive.
• Potential exposure to reputational and fiscal damage in the event of non-compliance and fines.
• Understanding which e-invoicing solution is the best fit for their business now and in the future.
• Changing established business processes to meet the new data requirements for e-invoicing and reporting.

What does the EU cross-border B2B proposal say?

Under the EU proposal, the e-invoice becomes the default method of invoicing in EU trade. Companies are expected to issue their e-invoices within two days of the supply. This brings the DRR rules much closer to real-time reporting of tax information.

For the same reason, businesses will no longer be able to issue so-called ‘summary invoices’ covering the supplies made in a calendar month. These would contradict the new aim of almost real-time digital reporting.

Take a practical example: a cross-border sale of goods from one EU Member State to another. The following rules should be observed:

1. The supplier in Member State 1 issues an e-invoice to the buyer in Member State 2.
2. The supplier in Member State 1 then reports the transaction to their local Tax Authority within 2 days of issuing it.
3. The Buyer in Member State 2 reports the transaction to their local Tax Authority within 2 days of receiving it.
4. The local tax authority in Member State 1 provides details of the transaction to the EU VIES system.
5. The local Tax Authority in Member State 2 also provides details to the EU VIES system to match and confirm the transaction.

What happens next with the EU proposal?

The next formal step is for the EU proposal to go to the Council of the EU for approval. It will also be sent to the European Parliament and the Economic and Social Committee for consultations.

Once the main proposal is approved, the EU will publish more detailed instructions and technical information. This will help businesses put the new e-invoice rules into practice. The rules are planned to come into force on January 1, 2028.

How do existing e-invoicing systems fit with the EU proposal?

The new rules in the EU proposal would apply to all EU Member States. EU countries with current e-invoicing requirements will also need to comply with the new EU-wide rules. Member States can still adopt their own domestic DRR rules, as long as these are compatible with the proposed EU-wide DRR.

Two good examples of EU countries that have had e-invoicing on their agenda for a while are Italy and France. Their planned e-invoice models differ a lot from the EU proposal:

The centralised exchange and clearance model in Italy

Italy uses a fully centralised e-invoicing model. The government plays a key role in all B2C and B2B domestic supplies:

1. The supplier should submit their e-invoice to the Government.
2. The Government would then validate the transaction to the supplier.
3. The Government would provide the e-invoice to the buyer.

The de-centralised exchange and clearance model proposal by France

France's proposed domestic model (to come into force in 2024) is a bit more complex. It gives a key role to a certified third-party solution provider (TPS):

1. The supplier provides transaction data to an approved and certified TPS.
2. The supplier's TPS carries out data validation, formatting, conversion, and electronic signatures.
3. The supplier's TPS sends the e-document to a central platform and receives a clearance notification from it. It then sends the e-invoice to the buyer's TPS.
4. The buyer's TPS sends the e-invoice to the central platform for validation and receives clearance. It then forwards the cleared e-invoice to the buyer.

How should businesses prepare for EU DRR and global e-invoicing trends?

The EU proposal on e-invoicing and e-reporting is not a stand-alone project. E-invoicing has been a hot topic in the global VAT landscape for a while now. More and more countries are introducing their own DRR rules. The pioneers were in South America, and the trend has moved to Asia, Africa, and Australia.

This automation has clear advantages. But countries are adopting e-invoicing requirements at different times and in different ways. That can be frustrating for multinational companies operating in more than one part of the world.

Many professionals struggle to understand the e-invoicing rules that are planned or already in place in different countries. They see this as one of their main challenges in VAT compliance.

With this in mind, here are a few basic steps to help businesses prepare for the new DRR requirements:

1. Education: Learn the exact requirements coming into force and their mandatory and optional features. Use trusted tax partners, tax news sources, etc.
2. Strategy: Define a clear strategy for the long-term requirements. The more time you spend planning carefully at the start, the less time and cost you will spend on last-minute changes.
3. Processes: Put processes in place to improve ERP data quality. Here are some important areas to consider in the data strategy:

• Capture - Your systems and processes should capture all of the required data fields.
• Quality - There should be no gaps or incorrect details in your data.
• Standardisation – You need a standard tax data model supported by data definitions. This allows for consistency and easier maintenance and updates.
• Monitoring – Keep doing regular checks on your data, with improvements where needed. This prevents issues and tax risk from building up.

For more information on any of the topics covered in this edition of Taxually News please contact: thomas.maas@taxually.com

How Taxually handles this

Taxually’s e-invoicing API sends structured invoices to each country’s clearance platform, such as Italy’s SDI, Poland’s KSeF and Peppol networks, covering 32 countries from one integration. The VAT returns those invoices feed into are filed through CrossTax on the same platform.

Related guides

• What Is a VAT Number (VAT ID)? And Why Do You Need One?
• Understanding VAT Place of Supply Goods Rules
• EU Implementing New Registration and Reporting Rules From January 2025