Last year, the Economic and Financial Affairs Council (ECOFIN) adopted the VAT in the Digital Age (ViDA) legislative proposals. These new rules aim to simplify VAT in the EU and strengthen its resistance to fraud.
Earlier this month, ECOFIN officially approved the new directive. EU member states must now implement these rules.
ViDA: Preventing fraud, simplifying rules
Each year, VAT fraud and cross-border tax evasion schemes - including ‘carousel fraud’ – result in billions of dollars in losses for EU treasuries and member states. The current rules are complex and impose a significant administrative burden on businesses.
ViDA has been in development for some time. With its approval, this directive brings a major overhaul to the VAT system.
Key changes
With the directive now approved, EU member states must implement its rules into national legislation. The most significant changes are expected to take effect on 1 July 2028. However, some member states may choose to update their national rules earlier.
The ViDA Directive primarily impacts the digital supply of goods and services, covering areas such as e-invoicing, digital reporting and VAT for the platform economy.
It also introduces several administrative reforms, including the Single VAT Registration and adjustments to the One Stop Shop (OSS).
Beyond these core updates, the revised proposal includes additional changes.
Read more about the ViDA Directive and the expected implementation timetable here.
Timely preparation is essential
Although the changes may not take effect for some time, we strongly advise internationally operating businesses to begin preparations as soon as possible.
Key business processes, such as invoicing and ERP configuration, will need to be adjusted to comply with the new e-invoicing rules.
Additionally, implementing digital reporting requirements within the organisation may be a complex and time-consuming process.
Properly implementing these changes will often require significant time and financial investment.
Do you have questions about the latest VAT developments? Want to learn more about ViDA and how it impacts your business? Contact VAT specialist Marisa Hut for expert guidance and insights.
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