Amendment to the European VAT Directive - ViDA alias VAT in the Digital Age
In early November 2024, the Economic and Financial Affairs Council (ECOFIN) approved a proposal for an amendment to the European VAT Directive, which should bring a significant extension of electronic invoicing and introduce so-called digital reporting, i.e. the real-time transmission of issued VAT invoices electronically to the Tax Authority. Significant changes are also expected in short-term accommodation and passenger transport platforms. The package of changes, known as ViDA (VAT in the Digital Age), should be gradually implemented by EU Member States, with the first changes to be reflected in Member States' national legislations as of 2028. The proposed changes, consisting of three pillars, should affect almost all VAT payers established in the EU.
Electronic invoicing and digital reporting
ViDA should make e-invoicing and digital reporting mandatory for cross-border supplies of goods and services within the EU from the second half of 2030 at the latest. Member States already using digital reporting should implement the new rules by January 2035. The current widely used PDF invoice format should be replaced by a standardized electronic invoice in the form complying with the European standard on electronic invoicing EN16931. In addition, e-invoicing should now be a standard procedure, the use of which will not be subject to customer consent.
It should be obligatory to issue an electronic invoice within 10 days after the chargeable event or receipt of the advance payment. In the case of so-called "self-billing", when the VAT invoice is issued by the customer, the invoice should be issued within 5 days. Within the 10-day period, the issued VAT invoices should be reported directly to the Tax Authorities in a digital manner. Such a digital reporting should replace the current EU-wide system of EU Sales Lists. The purpose of these changes is to reduce the possibility of tax fraud in the intra-community transactions.
The introduction of e-invoicing obligations for domestic transactions should remain entirely within the competence of the Member States.
VAT changes regarding digital platforms
Significant changes should affect platforms that provide short-term accommodation and passenger transport services. The reason is an equalization of market conditions between traditional providers and providers of the same services who use intermediaries through these platforms (e.g., Booking and Airbnb).
These platforms should be considered as deemed provider of these services and will be obliged to pay VAT, provided that the real providers of these services do not provide their tax identification number for VAT purposes (i.e. they act as non-VAT payers).
This change should take effect as of 2030 at the latest, but Member States can voluntarily opt in as early as July 2028.
Single VAT registration within the EU
The single VAT registration within the EU, which is proposed to take effect from July 2028, should be based on an improvement and extension of the existing One Stop Shop scheme, which allows tax obligations in other EU Member States to be met through a single registration. This has so far been used in cases where taxable persons sell goods and services to non-business individuals in another EU Member States. As part of the single VAT registration, the transfer of own goods to another EU Member State should also be reported which will lead to the abolition of the intracommunity call-off stock regime.
The adoption of the ViDA package still requires the approval of the European Parliament. However, no major changes are expected at this stage of the legislative process.
We will keep you informed about the details of the upcoming changes. If you would like more information about the planned VAT changes, please do not hesitate to contact us at any time.
Authors:
Milena Drábová, Tax Department Manager
Marek Šmíd, Senior Consultant, Tax Department
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