On March 11, 2025, following extensive negotiations, consultations, and legislative work, the Council of the European Union officially adopted the “VAT in the Digital Age” (ViDA) package, introducing sweeping reforms to the EU VAT system. As a result, amendments to the EU VAT Directive and associated regulations will be required. Implementing regulations will take effect 20 days after their publication in the Official Journal of the European Union and will apply automatically. However, for the VAT Directive amendments to be effective, each Member State must transpose them into its national legal framework.
Three core pillars that the ViDA reform is built on
Single EU-Wide VAT Registration
By 2028, the reverse charge mechanism under Article 194 of the EU VAT Directive will be significantly extended. This will apply to the supply of goods and services by vendors without a fixed establishment or place of business in the destination Member State, provided the recipient is VAT-registered in that country.
In the same year, the scope of the One Stop Shop (OSS) scheme will be expanded to include intra-EU movements of own goods and all B2C sales conducted across borders.
E-Invoicing and VAT Reporting Requirements
From the outset of ViDA’s implementation, Member States will be allowed to introduce mandatory e-invoicing. While many countries have already adopted or are in the process of implementing such systems, ViDA will harmonize this practice EU-wide. Under the reform, electronic invoices will become the only legally recognized format, replacing paper invoices.
By 2030, e-invoicing will be compulsory for cross-border transactions within the EU. Digital Reporting Requirements (DRR) will be introduced for intra-Community B2B transactions, replacing the current European Community Sales List (ECSL).
Businesses will be required to issue an e-invoice within two days of the VAT liability arising and to transmit it to the national e-invoicing system within the same timeframe.
By 2035, existing national digital reporting frameworks must be aligned with ViDA standards. Countries with established systems (e.g. Italy, France, Poland, Germany, Romania, and Belgium) will need to ensure compliance by the deadline.
VAT Compliance Obligations for Digital Platforms
From 2030, new reporting obligations will apply to digital platforms.
Currently, platforms facilitating the sale of goods are treated as deemed suppliers. Under ViDA, this deemed supplier status will be extended to platforms offering short-term accommodation and passenger transport services, as well as B2B intra-EU transactions facilitated through their systems.
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ViDA: Background and Strategic Goals
The European Commission formally launched the ViDA reform on December 8, 2022. This initiated a series of negotiations within the Council and European Parliament to establish a modernized regulatory framework for VAT, tax compliance, and cross-border operations within the internal market.
ViDA responds to ongoing challenges faced by Member States, including a persistently high VAT gap, fraudulent business practices, and VAT fraud networks exploiting legal loopholes and systemic inefficiencies.
Key objectives of the ViDA package include:
- Implementing mandatory e-invoicing and real-time reporting to reduce VAT fraud and enhance data sharing between tax authorities.
- Expanding the OSS scheme to cover B2B transactions, minimizing the need for multiple VAT registrations across Member States.
- Enhancing data exchange and increasing VAT compliance responsibilities for digital platforms, particularly those in short-term rental and passenger transport sectors.
- Promoting full digitization of VAT processes to streamline cross-border business operations and improve audit efficiency.
- Harmonizing technical and legal requirements across the EU to reduce discrepancies in national invoicing and reporting systems.
Who Will Be Affected?
The primary stakeholders include companies conducting B2B and B2C sales across the EU—whether already using the OSS or providing goods/services in multiple Member States.
Digital platforms, especially those involved in short-term rentals and transport services, will face new VAT collection and reporting obligations on behalf of their users.
All VAT-registered businesses, regardless of whether they currently use traditional or electronic invoicing systems, will be gradually required to adopt e-invoicing and real-time reporting in accordance with the new regulations.
ViDA will have a direct impact on both B2B and B2C transaction models:
- B2B Transactions – mandatory e-invoicing and real-time reporting will transform the invoicing process between businesses. The OSS scheme will be extended to B2B transactions, facilitating VAT compliance and reducing the need for multiple registrations across jurisdictions.
- B2C Transactions -planned changes will further simplify the OSS (and IOSS for low-value imported goods), significantly reducing administrative burdens and the number of declarations submitted across various Member States. Additional changes are anticipated in how VAT is collected and reported for cross-border consumer services.
Implications for VAT Registration, Declarations, ECSL, and Intrastat
- VAT Registration – The expanded OSS will allow more international transactions to be reported under a single VAT number, minimizing the need for multi-country VAT registrations.
- VAT Declarations – Real-time reporting and e-invoicing will standardize how and when data is submitted to tax authorities. Member States will implement systems akin to Poland’s KSeF or Italy’s SdI.
- ECSL and Intrastat – Eventually, data currently reported via ECSL and Intrastat will be sourced automatically through e-invoicing and real-time reporting systems. These obligations will be phased out in favor of integrated OSS VAT reporting.
