Key takeaways
- The ViDA reforms represent a major EU initiative to modernize and digitalize VAT compliance between 2024 and 2030.
- Digital Reporting Requirements (DRR) will be implemented from 2030, standardizing real-time VAT reporting for cross-border and zero-rated transactions.
- DRR aims to replace outdated systems, improve data standardization, and reduce VAT evasion, though it may increase compliance costs.
- The platform economy rules—covering short-term accommodation and passenger transport—are delayed to 2027, requiring platforms to collect VAT unless providers supply valid VAT IDs.
- The definition of short-term accommodation has been shortened from 45 to 30 days, and small businesses under the 2025 SME scheme may be exempt.
- Simplified VAT registration and reporting via expanded OSS and new single VAT registration rules are postponed to 2027, easing cross-border VAT compliance.
- From 2026, minor updates will expand OSS coverage to energy supplies and adjust VAT thresholds for small businesses.
- Overall, ViDA aims to create a transparent, fraud-resistant, and efficient VAT system, requiring businesses to begin early preparation for compliance.
On May 14, 2024, the European Union faced a setback as the Economic and Financial Affairs Council (ECOFIN) failed to reach a consensus on the proposed ‘VAT in the Digital Age’ (ViDA) reforms. However, as only one member state opposed the proposals (specifically those related to the platform economy), it is hoped a compromise will be reached soon. The reforms, once approved, are expected to be rolled out progressively between 2024 and 2030.
Here are some of the key ViDA proposals put forward:
New electronic invoicing requirements
One noticeable feature of the planned legislation is the mandatory adoption of electronic invoicing by 2030. This will require invoices to be in a structured format compliant with the European e-invoicing standard (EN16931), significantly moving away from PDFs and similar formats which are now deemed inadequate. This shift underscores the EU’s commitment to reducing VAT fraud and enhancing the efficiency of tax collection. The allowance for hybrid invoices and the extension of the invoice issuance period to ten days after a transaction provides a balanced approach, easing the transition for businesses.
Digital reporting to become mandatory
The implementation of Digital Reporting Requirements (DRR) from 2030 is another critical component of the reforms. This initiative will mandate the reporting of certain types of transactions, including zero-rated sales and intra-EU acquisitions. It is designed to replace older systems that were less effective at curbing VAT evasion on cross-border transactions. Although the new system introduces standardization in reporting invoice data, it poses potential compliance costs and timing challenges as each member state develops its own real-time reporting technology.
Revised rules for platform economy delayed
The implementation of new platform economy rules is delayed until 2027, mandating platforms for short-term accommodation and passenger transport to act as VAT collectors unless providers submit a valid VAT ID and declare their VAT management. Platforms must confirm the VAT charge to avoid tax liability, with further requirements for member states to verify these IDs. In an update, small businesses in the 2025 SME scheme may be exempt from these rules, and the term for short-term accommodation has been shortened from 45 to 30 days. Additionally, platform facilitation services to end consumers will be taxed where the transaction occurs, ensuring these are not included in the travel agents' special scheme.
Simplified VAT registration and reporting
The implementation of single VAT registration proposals has been postponed to 2027. These proposals focus on minimizing the need for businesses to register for VAT in EU member states where they are not established by expanding the One Stop Shop (OSS), introducing a new OSS regime for internal transfers of goods, and extending mandatory reverse charge mechanisms. Planned changes include broader OSS coverage for B2C sales and certain utility supplies, as well as simplified reporting for cross-border transfers of a company's own goods. Additionally, from 2026, minor adjustments are expected to be made, such as the reporting of certain energy supplies through the OSS and a revision of the VAT collection threshold for small businesses.
Looking forward
The ViDA reforms signify a comprehensive overhaul designed to streamline VAT-related processes and combat fraud more effectively. Businesses across the EU must start making preparations so they can adapt more easily to these changes once they become law. Although the transition will be complex, the long-term benefits of a more transparent and efficient VAT system are clear.
As specialists in VAT compliance, we can offer the comprehensive support your business needs to integrate compliant electronic invoicing systems, understand new digital reporting requirements, simplify VAT registration processes, and remain compliant with new platform economy rules. Partnering with Taxually ensures businesses are well-prepared for the changes, reducing compliance risks and enhancing operations in the new VAT landscape.
Book a free call with one of our VAT experts to find out how we can help your business grow and succeed, no matter what the regulatory future looks like.
Frequently asked questions
What are the Digital Reporting Requirements (DRR) under ViDA?
The DRR, effective from 2030, will mandate standardized digital reporting of transactions, including zero-rated sales and intra-EU acquisitions, to enhance VAT transparency and reduce fraud.
Why are the new platform economy rules delayed?
The platform rules for short-term accommodation and passenger transport are postponed until 2027 to allow additional time for technical and regulatory adjustments.
How will the platform economy rules work?
Platforms will be required to collect VAT on qualifying transactions unless providers present a valid VAT ID. Member states will also verify these IDs to ensure compliance.
What exemptions apply to small businesses?
Small businesses under the 2025 SME scheme may be exempt from the new platform rules, easing compliance burdens for microenterprises.
What changes are planned for VAT registration and OSS?
The single VAT registration system and expanded OSS—covering internal goods transfers and certain utilities—are now expected in 2027. These aim to simplify VAT obligations across EU borders.
When will the ViDA reforms be fully implemented?
ViDA reforms will be rolled out progressively from 2024 to 2030, with digital reporting set for 2030 as the final stage.
How should businesses prepare for ViDA?
Businesses should begin updating invoicing systems, integrating digital reporting tools, and reviewing cross-border VAT processes to ensure compliance before enforcement begins.
What are the long-term benefits of ViDA?
ViDA will create a more efficient, transparent, and fraud-resistant VAT environment, streamlining reporting and reducing administrative burdens across the EU.
