EU Reached an Agreement on the ViDA Initiative

On 5 November 2024, following compromises and modifications, the Economic and Financial Affairs Council (ECOFIN) adopted the VAT in the digital age (ViDA) initiative thus satisfying all 27 Member States. The three-pillared VAT in the digital age (ViDA) initiative is a set of fundamental changes to the EU’s common VAT rules with a phased implementation schedule. The following three pillars are covered in the compromised proposal:

Digital Reporting Requirements (DRR)

Establishing required e-invoicing for intra-community transactions and common standardised Digital Reporting Requirements (DRR). By 2035, all current national systems should be interoperable with the EU system, which is expected to be implemented by 2030.

Platform Economy

Addressing the platform economy’s issues for short-term rental of accommodation and passenger transport services by strengthening the role of digital platforms in VAT collection through the implementation of a “deemed supplier” model for accommodation and passenger transport.

Under this model, the platform will be in charge of charging and collecting VAT from clientele for supplies made through their facility by specific suppliers. Member States may choose to opt out. Voluntary adoption starting: July 2028.

Single VAT Registration

Reducing EU VAT registration requirements by widening the scope of the One-Stop Shop (OSS) for imports and the reverse charge for business-to-business (B2B) transactions. The OSS scheme will also be applicable to gas, electricity, heating, and cooling. Implementation date: July 2028.

Businesses that operate in the EU will have to evaluate how the ViDA initiative will affect their transactions, invoicing, and reporting procedures in order to ensure that their VAT reporting obligations are met in the future.