VAT in the Digital Age (ViDA) – The future of VAT: What you need to know

March 26, 2025

In brief

On 11 March 2025, the Council of the European Union formally adopted the ViDA reform package (covering a directive, a regulation and implementing regulation), concluding the legislative approval process. This milestone follows the European Parliament's vote on 12 February 2025 and the political agreement reached by ECOFIN Finance Ministers on 5 November 2024. The reforms, covering the three core pillars of ViDA, has been officially published in the EU Official Journal on 25 March 2025, and will enter into force on 14 April 2025.

While the regulations are directly applicable, the directive will have to be transposed into national law. With adoption complete, attention now turns to implementation. The European Commission is set to release Working Papers for each pillar, reflecting member state feedback gathered (expected by summer 2025). These documents will provide further clarity on implementing regulations, explanatory notes, and timetables, guiding businesses and tax authorities through the practical rollout of the reforms.

ViDA represents a significant step in modernising VAT rules, aligning them with the digital economy and the needs of the EU single market.

Key objectives of the ViDA proposal include:

Streamlining and harmonising EU VAT rules to address fragmentation and support the modern economy; and

Reducing administrative burdens for cross-border businesses while safeguarding Member States’ tax revenues.

A closer look at the three pillars of the ViDA proposal

ViDA consists of three key pillars, each with specific timelines and requirements:

Digital Reporting Requirements (DRR) and mandatory e-invoicing;
Changes to VAT treatment for the platform economy; and
Simplified single VAT registration.

What’s coming and when?

Effective as from July 2030: Implementation DRR and e-invoicing for cross-border transactions

Electronic invoicing:

Electronic invoicing will become the default method for issuing invoices;
Holding a valid e-invoice will become a material requirement for VAT recovery. However, Member States may allow alternative invoice formats for domestic transactions;
E-invoices must comply with the European Standard for e-invoicing, including specific syntaxes, while allowing flexibility to avoid unnecessary administrative burdens;
Summary invoices will be permitted unless restricted by Member States in fraud-sensitive sectors; and
Cross-border e-invoices must be issued within 10 days of the chargeable event.

New Digital Reporting Requirements (DRR):

Recapitulative statements (European Sales Listings) will be replaced by DRR;

DRR will include real-time reporting of B2B cross-border supplies of goods and services;
Member States may extend DRR to include:
- B2B cross-border acquisitions of goods and services;
- Domestic supplies (for both suppliers and recipients).

Transaction data must be reported by the supplier in real time, within 10 days of the chargeable event. Self-billing or buyer-reported transactions must be submitted no later than 15 days after the event; and

Effective as from July 2035: Harmonisation domestic e-invoicing requirements

Member States will converge existing domestic real-time reporting systems into the EU model by 1 January 2035, where applicable.

Effective as from July 2028: Voluntary implementation of the deemed supplier rules for ride and accommodation sharing platforms

Effective as from January 2030: Mandatory implementation of the deemed supplier rules for ride and accommodation sharing platforms

Platforms facilitating short-term accommodation (up to 30 nights) or passenger transport by road will be deemed the supplier of the service unless:

The service provider provides a valid local VAT ID or EU/Non-EU OSS ID; and
The provider declares that VAT will be charged on the supply.

Platforms that process payments, advertise, or redirect customers without facilitating the supply will generally not fall under these rules.

Effective as from January 2027: Extension One-Stop-Shop (OSS) scheme for the supply of gas, electricity, heating and cooling

Expansion of the OSS scheme: From 1 January 2027, the scope of the OSS scheme will include the supplies of natural gas, electricity, heating and cooling energy.

Effective as from July 2028: Further extension OSS scheme, domestic reverse-charge and removal of the call-stock arrangements

Further extension of the OSS scheme: The OSS scheme will now also include the supplies related to e-commerce, supplies of goods with installation, goods sold aboard ships, trains and aircrafts;
New special scheme for own goods transfers: the current call-off stock simplification will disappear and will be replaced, resulting in the cross-border movements of own stock being reported in the OSS returns;
Mandatory reverse charge mechanism: For non-resident suppliers (non-VAT registered in the Member State where the VAT is due), the B2B customers will be responsible for VAT under a mandatory reverse charge mechanism.

Next steps: Prepare for the changes ahead

The adoption of ViDA introduces significant changes that will impact data collection, verification, processing, and reporting across multiple functions within organisations, including accounting, finance, tax, and commercial departments. Businesses operating within the EU must act quickly to ensure they are ready to comply with these new requirements.

Key considerations for businesses include:

Digital infrastructure: Evaluate and upgrade your systems to ensure compliance with mandatory e-invoicing and real-time reporting requirements;

Data accuracy and consistency: Implement processes to ensure the accuracy of transaction data across all business units;

Cross-functional collaboration: Strengthen communication between finance, tax, and commercial teams to align on ViDA’s requirements;

Staff training: Train relevant teams to understand and manage the new processes, particularly those related to e-invoicing, DRR, and VAT reporting; and

Regulatory monitoring: Stay updated on Member States’ specific guidelines and transitional arrangements to ensure timely compliance.

Timeline of key action points for businesses

2025

Early 2025: Formal adoption of the ViDA package by the European Parliament. Businesses should:
- Assess the impact of ViDA on their operations; and
- Begin discussions with software providers about system upgrades or new solutions.

Mid-2025: Member States will likely publish national implementation details. Use this period to:
- Map out specific requirements in each country where your business operates; and
- Start pilot projects for e-invoicing and real-time reporting.

2026

Q1-Q2 2026: Conduct a gap analysis to identify compliance risks and areas requiring significant system or process changes; and

Q3-Q4 2026: Implement necessary system updates and internal controls to prepare for mandatory e-invoicing and DRR.

2027

1 January 2027: Expansion of the OSS scheme for gas, electricity, heating, and cooling supplies; and

Begin testing compliance with new reporting standards through internal simulations or audits.

2028

1 July 2028: Implementation of the mandatory reverse charge mechanism and expansion of OSS for domestic B2C supplies; and

Finalise systems for Pillar 2 changes affecting the platform economy.

2030

1 July 2030: Go-live for Pillar 1 changes, including mandatory e-invoicing and real-time reporting under DRR. Businesses must ensure full operational readiness before this date.

Contact us: Let’s navigate ViDA together

The implementation of ViDA will require significant adjustments, but our team is here to help. We offer:

Impact assessments: To identify how ViDA will affect your business operations, systems, and compliance processes;

Customised solutions: To develop strategies and action plans tailored to your specific needs;

Training programmes: To provide targeted training to your teams on e-invoicing, DRR, OSS, and VAT compliance; and

Ongoing support: To assist with implementing, testing, and monitoring to ensure full compliance with ViDA’s requirements.

Please don’t hesitate to reach out to your regular contact or one of our VAT experts to start preparing for the transition to ViDA. Together, we can ensure a smooth and successful adaptation to these transformative changes.

You can also subscribe to our Knowledge Navigator and gain access to its specialised modules on electronic invoicing, including real-time updates on country regulations, compliance guidelines, and best practices.