Council members agree on ViDA directive implementation
Almost two years have passed since the European Commission presented the first draft of the ViDA directive (VAT in the Digital Age) on 8 December 2022. Since then, there have been lively discussions. On 5 November 2024, the Council of the EU finally reached an agreement on the compromise proposal of 30 October 2024. We summarise the most important points here.
Please note: As there have been substantial changes since the consultation of the European Parliament on 22 November 2023, the Parliament must now be consulted again before the Council can finally adopt the ViDA Directive and it can be published in the Official Journal of the EU.
National e-invoicing
From the 20th day after publication of the Directive in the Official Journal of the European Union, the Member States may make e-invoices mandatory in their territory and make them independent of the recipient's consent. An application to the Council of the EU is no longer required.
Platform economy
The chain transaction fiction for sales by taxable persons based in third countries to non-taxable persons via digital platforms will be extended to the B2B sector as of 1 January 2027.
Digital platforms that support short-term accommodation rental or passenger transport services by road between two locations in the EU will also be treated in future as if they had purchased and provided the service themselves. If the lessor/transport company informs the platform operator of its VAT ID and declares that it will declare and pay the VAT itself, this can be waived. Member States must implement these regulations by 1 January 2030, but can do so voluntarily from 1 July 2028.
Compared to the EU Commission's original proposal, the definition of short-term rental of accommodation has been changed, which according to the Commission proposal was still an uninterrupted rental of accommodation for a maximum of 45 days, but is now described as an uninterrupted letting of accommodation to the same person for a maximum of 30 nights. In addition, Member States may make exceptions for small businesses.
The European Commission had proposed extending the deemed supplier provision to all types of supplies and to intra-Community transfers of own goods. The Council did not follow this proposal. The rules for works of art and antiques also remain unchanged.
Single VAT registration through reverse charge and one-stop shop
Companies are to be relieved even more than before of the difficulties associated with VAT registration obligations abroad. To this end, the one-stop shop (OSS), which currently applies to cross-border transactions with non-taxable persons and certain assimilated persons from one EU Member State to another, will be extended to certain transactions (e.g. electricity and gas) within a Member State if the supplier is not established in that Member State. This change will take effect from 1 January 2027. The Council is currently still discussing whether the import one-stop shop (iOSS) should be made mandatory.
In addition, as of 1 July 2028, the reverse charge mechanism will be extended to all cases in which the supplier is not established and not registered for VAT in the Member State in which he provides the supply, if the recipient is registered there. The Member States may extend this regulation even further, so that the reverse charge procedure must always be applied if the supplier is not established in the Member State concerned.
The current consignment stock regulation is being phased out because the expansion of the reverse charge procedure means that there is no longer any need for it.
E-invoicing and e-filing
From 1 July 2030, the electronic, near-real-time reporting system is to be introduced together with the e-invoice for intra-Community supplies of goods and services. This means that the recapitulative statement, which is considered outdated, will no longer be required and the tax authorities will have better control options.
While the Commission proposal still stipulated that invoices covered by e-filing (i.e. for intra-Community supplies of goods and services) must be issued two days after the transaction has been carried out, the Council members have now agreed on 10 days. In principle, the digital report must also be submitted to the tax office by this date. The receipt of the supply should also be reported five days after receipt of the invoice, but the Member States can foresee that this is not necessary.
Impacts for businesses
International businesses with should check now whether the extended One-Stop-Shop is an option for them and whether VAT registrations abroad can be closed in the future.
As providers of transport and accommodation services on digital platforms are generally small businesses that do not owe VAT, they currently have a significant competitive advantage. The regulations for the platform economy eliminate this discrimination. Operators of digital platforms will face considerable additional work in relation to VAT declarations.
Even if the switch to the near-real-time reporting system and e-invoicing for intra-Community supplies of goods and services still seems a long way off, businesses should keep this far-reaching change in mind when making decisions about systems and processes today or in the near future. It remains to be seen how quickly and how well the tax authorities are able to implement this change.
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