On November 5, 2024, the European Council agreed on the ViDA (VAT in the Digital Age) package during the ECOFIN meeting. This new plan aims to modernize VAT across the EU, focusing on digital solutions. It introduces major changes, starting in 2025 and gradually rolling out until 2035 to fully harmonize e-invoicing systems.

Here’s what’s changing:

• No More Approval for Domestic E-Invoicing: EU countries won’t need the European Commission’s approval to implement domestic e-invoicing.
• Expanding the One-Stop Shop (OSS): Businesses will have more options to simplify VAT processes.
• Mandatory Digital Reporting (DRR): Intra-EU transactions will require e-invoicing to improve reporting and reduce tax fraud.

The ViDA initiative is a big step toward creating a fair, efficient, and digital VAT system. It focuses on better tax collection, reducing fraud, and making VAT rules easier for businesses and governments to manage.

Key Dates to Remember

• 2025: Approval for domestic e-invoicing will no longer be needed.
• 2027: New updates for the e-commerce package, including OSS changes.
• 2028: Single VAT registration for all B2C supplies and stock transfers.
• 2030: Mandatory e-invoicing for intra-EU B2B transactions.
• 2035: All e-invoicing systems must fully match EU standards.

What is ViDA?

ViDA is the EU’s plan to modernize VAT rules and make them suitable for the digital age. The current VAT system is outdated and allows for tax fraud and revenue loss. For example, the EU lost €93 billion in VAT revenue in 2020, with a large part linked to cross-border transactions.

The ViDA project focuses on three main areas:

1. Digital Reporting Requirements (DRR): Standardizing e-invoicing across the EU to make tax collection faster, safer, and more transparent.
2. Platform Economy: Making digital platforms like rental and transport services responsible for collecting VAT.
3. One-Stop Shop (OSS): A single VAT registration system for businesses operating in multiple EU countries.

Why Does ViDA Matter?

These reforms will:

• Simplify VAT processes for businesses.
• Reduce tax fraud and increase revenue collection.
• Promote automation and digital transformation.
• Save costs for businesses and governments.
• Support better cross-border trade.

The agreement must now go to the European Parliament for final approval, with the first changes starting in 2025. This marks a major step toward a smarter and more efficient tax system for the EU.