VAT in the Digital Age (ViDa)

What is ViDA?

The ViDA initiative aims to modernise the European VAT system and simplify the obligations for businesses trading across the EU. It is made up of three sets of changes to the EU VAT system, known as the three ‘Pillars’:

1. Digital reporting and e-invoicing requirements.
2. Making digital platforms responsible for collecting VAT.
3. Introducing a way for businesses to operate in the EU with a single VAT registration.

To read more about the three pillars, please click here.

The EU Commission agreed changes in principle during November 2024. Changes will be implemented and will gradually become mandatory between 2028 and 2030.

In Summary

When are the changes coming?

Pillar 1 will be mandatory from 1 July 2030. Pillars 2-3 will be mandatory from 1 July 2028. It is important to note that some EU Member States could start (and have begun) to introduce some of these changes before the deadlines.

How will the changes affect your business?

Each of the three ‘pillars’ of VAT will mean businesses need to consider new factors when looking to trade in the EU.

1. VAT compliance in the EU is becoming much more technology driven. Businesses trading in the EU will need to be equipped to issue and receive digital invoices, and to report these invoices digitally to Tax Authorities.
2. Certain businesses may not need to register at all. Digital platforms will be required to collect and pay VAT more often on behalf of the businesses using them.
3. Businesses looking to trade in the EU will need to consider where registrations are needed and how to reclaim VAT incurred from their suppliers. Non-EU businesses trading in the EU will often have to wait longer for relief from VAT on purchases if they claim refunds of VAT through 13^th Directive refund claims or via the EU VAT Refund Scheme.