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ViDA - digital reporting and e-invoicing still music of the future

The proposal for a VAT in the Digital Age (ViDA) Directive that would modernise and advance the EU’s single VAT system is running behind schedule. The proposal did not move forward during the Spanish Presidency of the Council of the EU, but in the programme statement of Belgium, holding the Presidency of the Council of the Union in the first half of this year, digitisation and in particular the ViDA proposal are high on the agenda.

The Belgian presidency will address VAT as one of the key points of its tax and customs agenda. The priority of the ViDA proposal and of the Belgian presidency is to eliminate the VAT gap (the difference between expected and actually collected VAT). The proposal is essential to maintain the fairness and efficiency of the tax system at a time when the digital economy is becoming increasingly important. The Belgian presidency puts emphasis on the modernisation of tax rules to better match current trends and the needs of the EU.

The original proposal for the ViDA Directive envisaged the introduction of Pillar 1, i.e., the possibility for member states to introduce compulsory e-invoicing at the intra-community level as early as in 2024. In addition, new rules for digital platforms (Pillar 2) were planned with effect from 2025 and a single registration for VAT purposes (Pillar 3) with effect from 2028. However, the current delay of the ViDA proposal postpones the potential validity of each agenda to sometime in the future. It is estimated that all digital reporting under Pillar 1 will be delayed until 2030, with the other two pillars having to wait for at least one year.

These delays will most likely have a significant impact on the harmonisation and efficiency of the tax system. It is therefore important for the Belgian presidency to address this issue, give it the appropriate attention, address the pressing issues raised by the member states regarding financial reporting, and urge an EU-wide solution to this situation.