VAT in the Digital Age (ViDA) approaches: are you ready?

Albeit an agreement on the final proposal has not been reached, the EU Council recently released some documents ahead of the latest EU Council of Finance Ministers (“ECOFIN”) meeting which has provided a roadmap as to how the reporting of EU VAT transactions is likely to look in the future. 

We have summarised the main features below which can be categorised into three fundamental areas;

1. E-invoicing and digital reporting: Impacting all businesses involved in Business to Business (“B2B”) trade across the EU.
2. Online platform providers: Primarily in the accommodation and passenger transport sectors.
3. A single EU VAT registration: Impacting businesses already registered for VAT in EU member states as non-established traders.

E-invoicing and digital reporting

Proposed implementation date of 1 July 2030.

For the supplier

• The supplier must issue an e-invoice for B2B EU sales within ten days of the date of the sale (or prepayment if earlier).
• The supplier is obliged to report specific data from the e-invoice for the supplies when issuing the e-invoice (subject to some exceptions).
• VIES (VAT Information Exchange System) provides a mechanism whereby checks can be made in each Member State on the validity of claims to zero-rating. It helps to detect unreported movements of zero-rated goods between Member States. Under ViDA, VIES are set to be abolished (also known as EC Sales Listings) and the supplier will no longer be required to prepare and submit same to the national tax authorities. 

For the customer

The customer is obliged to report;

• intra-EU acquisitions of goods and;
• purchases of reverse charge services 

within five days of the date of issuance of the e-invoice. It is expected that Member States can waive this requirement.

Online platform providers

Implementation date of 1 July 2027.

• The platforms will become the deemed supplier for VAT purposes, meaning the platform is responsible for accounting for the VAT arising. This applies to facilitating supplies of passenger transport and short-term accommodation, in cases where the underlying supplier is not required to account for VAT. It is anticipated that Member States can opt-out of making the platform a deemed supplier where the underlying supplier is a SME for VAT purposes (where certain criteria are met).
• The VAT exemption will not apply where accommodation is rented to the same person for a maximum of 30 nights (again, where certain criteria are met).
• Supplies falling within the Tour Operators’ Margin Scheme (“TOMS”) will not come within the remit of these new rules.
• The Import One Stop Shop (“IOSS”) will remain optional for online platforms and vendors.

Single EU VAT registration

Implementation date of 1 July 2027 [1]

• The Union One Stop Shop will be expanded to include all types of business to consumer (“B2C”) supplies.
• New OSS scheme for transfers of goods in line with original proposal. However, no exclusion for capital goods where owner is entitled to full VAT recovery (but subsequent adjustment required if subsequent self-supply or exempt use of those capital goods). Exclusion from OSS of all goods.
• Member States may apply reverse charge to supplies by a non-established supplier to a customer (even if not already VAT registered).
• VAT call-off stock simplification to be abolished.

What's next?

The next ECOFIN meeting is due to be held on 21 June 2024. At the May meeting, Estonia objected to some elements of the ViDA proposals, so it is hoped that unanimous approval from all 27 Member States will be the outcome of the imminent June meeting.

Please contact Janette Maxwell to discuss how these changes may impact your business and to begin the process of adapting to the inevitable changes coming down the line.

[1] Earlier effective date of 1 January 2026 for B2C supplies of electricity, natural gas, and cooling/heating by non-established suppliers.