ViDA: A New Era for VAT in the European Union

The European Union has adopted the “VAT in the Digital Age” (ViDA) legislative package to modernise and harmonise the VAT system for today’s digital environment. The reform aims to simplify tax procedures, improve revenue collection and adapt to new developments in e-commerce and the platform economy.

Main changes introduced by ViDA

1. Import One-Stop Shop (IOSS)

The Import One-Stop Shop system will be expanded and improved, allowing suppliers and platforms to declare and pay VAT in a single Member State, regardless of the goods’ final destination within the EU. This will significantly reduce the administrative burden and speed up the entry of parcels into the European market.

2. Responsibility of digital platforms

From 1 July 2028, platforms facilitating short-term accommodation and passenger transport services will be treated as “deemed suppliers” and therefore responsible for collecting and remitting the relevant VAT, unless the underlying supplier provides a valid tax identification number and declares that it will meet its tax obligations.

3. Mandatory e-invoicing

From 1 July 2030, structured electronic invoices will be mandatory for all cross-border B2B transactions within the EU. Real-time digital reporting requirements will also be introduced, allowing tax authorities to detect and prevent fraud more effectively.

4. A single VAT registration

The One-Stop Shop (OSS) system will be extended to cover a broader range of transactions, such as the movement of a company’s own goods between Member States, removing the need for multiple VAT registrations in different countries.

Benefits for users

• Consumers: Greater transparency on final prices, fewer delivery delays for imported goods and a smoother shopping experience.

• Businesses: Simpler tax obligations, lower administrative costs and an easier way to operate in several EU countries without separate tax registrations.

• Tax administrations: Improved VAT collection, less tax fraud and more effective monitoring of commercial transactions.

Key implementation dates

• 11 March 2025: The EU Council formally adopts the ViDA package.

• 14 April 2025: The first measures enter into force, allowing Member States to introduce e-invoicing without prior authorisation.

• 1 January 2027: Certain improvements to the Import One-Stop Shop (IOSS) take effect.

• 1 July 2028: Digital platform liability is introduced and the OSS is extended.

• 1 July 2030: E-invoicing and real-time digital reporting become mandatory for cross-border B2B transactions.

• 1 January 2035: Digital reporting systems are fully harmonised across all Member States.

Conclusion

Implementing the ViDA package is a significant step towards modernising the European Union’s VAT system. By adapting to the realities of digital trade and strengthening cooperation between Member States, the reforms are expected to benefit both consumers and businesses while reinforcing the integrity of the European tax system.