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Compliance and Regulations

VAT in the Digital Age (ViDA) update

May 15, 2024

On the 14th of May the Economic and Financial Affairs Council (ECOFIN) discussed the VAT in the Digital Age package (ViDA), which was recently amended by the European Commission.

The revised version incorporates a compromise of various perspectives, which makes big amendments to certain sections, including the roll-out of the proposed timeline. Even though the package was not approved, the Belgium Presidency is committed to closing the case and approving the package before their presidency mandate ends.

VAT in the Digital Age was first announced on the 8th of December 2022, in the VAT Directive 2006/112/EC and since then it has been actively discussed and disputed among the European Member States.

Digital reporting requirements: What is it in scope and from when?

Mandatory intra-community electronic invoicing

Electronic invoicing (e-invoicing) should become the standard method for issuing invoices in intra-community trades complying to the European standard for e-invoicing (EN 16931) from the 1st of July 2030.

In the new version of the proposal - opposite to the initial proposal - it is explicitly stated that Member States are allowed to deviate from this requirement in case of mandating e-invoicing for domestic transactions - essentially, they are allowed to use other standards.

Following the amendment of the e-invoice definition in the VAT Directive, the hybrid formats, such as the French Factur X and the German ZUGFeRD, may be used provided they contain all the necessary information in a structured format.

While in the initial ViDA proposal the issuance time of intra-community invoices was set to 2 days after the chargeable event, now this deadline has been increased to 10 days. Nevertheless, this amendment is still significantly shorter than the one in place today - 15 days after the end of the month following the chargeable event.

Optionally, Member States may impose an e-invoicing obligation for domestic transactions and remove the buyer right for acceptance, without the need of obtaining a derogation from the VAT Directive 2006/112/EC from the European Commission. This condition enters into force with effect from the entry into force of ViDA.

Member States are also given the freedom to apply accreditation schemes for taxpayers required to issue the invoice, to a third-party service provider doing that on their behalf, or to both.

Mandatory business-to-business intra-community digital reporting requirement

According to the latest amendment, from the 1st of July 2030 all businesses must digitally report their intra-community business-to-business (B2B) transactions to their local tax authorities. In order to avoid defragmentation, European-wide digital reporting requirements will be established, including the reported set of data. Tax administrations will need to receive real-time transaction-by-transaction data, facilitating data cross-matching.

Another clause states that Member States should provide the necessary tools to assist taxable persons in transmitting invoice data to their tax administration. These tools should enable the data to be sent either directly by the taxable person, by a third party on their behalf, or through an available public portal.

However, there is no provision of how invoices will be reported to the tax authorities, so this gives a certain freedom for Member States to decide and implement their solutions. Nevertheless, Member States with existing mandatory electronic -reporting systems in place will need to align their reporting requirements to the pan-European requirement by the 1st of January 2035.

Staying up to date

As ViDA develops, we at Banqup, will update our customers and partners on any new information or regulations. To ensure you also receive the latest information, sign up to our monthly tax compliance newsletter, or follow our new Compliance Pulse podcast to listen to updates on the go.

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