VAT in the Digital Age (ViDA) Adopted

Latest developments

• Update 11 March 2025: The Council of the European Union (EU) has given final green light to the ViDA package. As next steps, the directive, regulation and implementing regulation modified by the ViDA package shall enter into force on the 20th day following their publication in the Official Journal of the EU. While the regulations are directly applicable, the amendments to the EU VAT Directive will have to be transposed into national law by each Member State. Find here the official press release.
• Update 12 February 2025: On 12 February 2025, the European Parliament approved the European Commission's Re-Consulted Proposal on the ViDA package. As background, on 5 November 2024, the Council agreed on the ViDA package. However, due to substantial differences between the Commission’s original proposal and the Council’s agreed text, the Council decided on 7 November 2024 to re-consult the European Parliament. Following this re-consultation, in a plenary session, the Parliament, approved the Council's draft, and instructed its President to forward its position to the Council, the Commission, and national parliaments. Find official document here and the press release here.
• Update 5 November 2024: Finally, a political agreement is reached, Member States have approved VAT in the Digital Age in ECOFIN meeting held on 5 November 2024. The compromise text was adopted after almost two years of negotiations, overcoming Estonia's veto. Find here the official press release.

ViDA Package: New Timelines

The Commission published the long-awaited proposals from the VAT in the Digital Age package on 8 December 2022. You can find here more information about the initial legislative proposal.

After almost two years of negotiations between EU Member States, the compromise text was approved in the ECOFIN meeting held on 5 November 2024. The compromise text amended the initial proposal to onboard all countries and reach the political agreement. The updated draft regulations can be found at the bottom of the official press release of the approval.  

VAT in the Digital Age package consists of the following three pillars:

• VAT reporting obligations and e-invoicing
  • From VIDA's entry into force (likely 2025): Immediate e-invoicing authorization for Member States
  • 2030: e-invoicing mandate for cross-border transactions at EU level. 
  • 2030: Digital Reporting Requirements mandatory for B2B intra-Community sales and purchases, replacing the current ESL returns. Member states may extend these to domestic sales if aligned with EU standards.
  • 2035: harmonization of existing domestic digital reporting models, meaning that countries with pre-approved digital reporting systems (for example, Italy, France, Poland, Germany, Romania, and Belgium) must align with VIDA standards by this date.
• VAT treatment of the platform economy
  • 2030:  Platform economy requirements.
• Single EU VAT registration.
  • 2028:  Reverse charge requirement extension, applied when a foreign seller sells to a VAT-registered customer.
  • 2028: Extended OSS coverage, to include movements of own goods across EU borders, as well as all B2C supplies made abroad.

We have prepared a summary of the measures contained under each pillar.

VAT reporting obligations and e-invoicing

Pillar 1 focus on VAT reporting obligations and e-invoicing. This proposal will abolish ESL returns. Insterad, mandatory e-invoicing will be required, with these invoices reported to the tax authorities within two days from the day they are issued.

Businesses will have two working days to issue e-invoices related to the intra-Community supplies from the moment the transaction takes place (tax point). The electronic invoice will be reported also within the next two working days since the issuance of the invoice.

These changes imply a derogation of Articles 218 and 232 of the EU VAT Directive. These articles establish that e-invoices are equally valid as paper invoices and that electronic invoices require, in any case, the acceptance of the recipient.

Under the current rules, countries implementing mandatory e-invoicing on B2B transactions must ask first the Commission an authorization to deviate from those articles. However, the ViDA proposal changes the approach by making the electronic invoices the standard, and the paper invoices only accepted in those cases where the Member States allow it. Authorizations will no longer be required.

Pre-clearance or post-clearance?

An e-invoice is an electronically delivered invoice in a specified standardized format.​ They are issued, transmitted, and received in an XML format. ​Normally, e-invoices are reported to the tax authorities immediately after they are issued. There are two options to communicate them:

• Pre-clearance: E‐invoicing can be implemented via the pre-clearance method, where the seller must receive approval from the tax authorities in order to issue each invoice.  
• Post-clearance: On the contrary, under the post‐audit method (or post-clearance), the invoice is exchanged directly between the seller and the buyer, and only after the delivery to the customer, the invoice is subject to review from the tax authorities.

The Commission proposal follows the post-audit method, which is in line with the European standard for electronic invoicing. Those countries where e-invoicing is based on the clearance model would need to swift to the post-audit method up to 1 January 2028, in convergence with the digital reporting system.

VAT treatment of the platform economy

• At the moment, e-commerce platforms are liable for VAT on sales made by their sellers under certain conditions. This deemed supplier model is extended to online platforms offering accommodation and passenger transport services, based on the ViDA proposal. The electronic interface would now have to account for the VAT on the underlying supply, while the supply from the actual service provider (lessor or driver) to the electronic interface is VAT exempt. This means that the platform will issue an invoice charging VAT to the final customer for the accommodation or transport service provided. Also, the actual supplier will issue an exempt invoice to the platform.
• Separately, the deemed supplier model is also extended for online marketplaces: as they will become deemed suppliers for all the intra-Community transfers of goods and supplies of goods B2B or B2C made through them, irrespective of where the supplier is established.

Single EU VAT registration

The third pillar proposal aims for the single VAT registration, or SVR, within the European Union. To achieve this goal, the measures proposed can be summarized as follows:

• Extension of the reverse charge from Article 194 of the VAT Directive to all domestic supplies of goods and services B2B performed by a non-established company. The VAT liability is shifted to the customer with a local VAT number, except for transactions subject to the margin scheme.
• Deemed Intra-Community transactions, or movements of own goods between EU countries, would no longer require a VAT registration abroad, as these movements would be reported in a new OSS scheme for the transfers of goods. The acquisition is considered VAT-exempt. The only exception would be the transfer of capital goods.
• The deemed supplier model for online marketplaces is extended to all types of supplies made within the EU via a marketplace, irrespective of where the seller is established, and irrespective of the status of the customer – B2B or B2C. Following this approach, the seller makes an exempt supply to the marketplace.
• Connected to the previous point, exceptionally, electronic interfaces can also declare domestic supplies of goods B2C made by sellers who do not have a VAT number in the country where the transaction is performed. This will be possible by extending the scope of Union OSS returns for reporting these transactions by the deemed suppliers.
• Extension of the Union OSS scheme to all B2C supplies of goods, including supplies of goods with installation, and supplies of goods on board of aircrafts, ships, trains, etc. and energy supplies made to final customers established in another Member State. In addition, the scheme can also be applied for domestic supplies of margin scheme goods to any other taxable person supplied under the margin scheme by taxable dealers
• IOSS will become mandatory for distance sales of imported goods made via marketplaces acting under the deemed supplier model. The non-Union scheme will be extended to cover the supplies of services made by non-EU supplies to all final customers.