What’s in the revised ViDA proposal?
On 8 May 2024, the European Commission published an updated proposal for the VAT in the Digital Age (ViDA) package, to be discussed at the June ECOFIN meeting with the aim to reach an agreement during the Belgian Presidency of the EU Council. The reform focuses on three main areas: changing the rules for digital platforms, introducing a single VAT registration, and a new unified digital reporting system.
Changes to digital platform rules
From 1 July 2027, the proposal requires digital platforms that mediate short-term rentals and transport of persons to be regarded as ‘deemed providers’ of these services where the actual providers of the services do not provide their VAT identification number (i.e., where they act as VAT non-payers). This move is intended to increase transparency and shift the responsibility for tax collection to the platforms. The updated version also adds certain exemptions and allows member states to exclude short-term rentals and road passenger transport from this rule where these services are provided by small enterprises (SMEs).
Single VAT registration
The OSS scheme allowing businesses to register in one member state and declare VAT throughout the EU will be extended. From 1 July 2027, it will cover transfers of own goods between member states, sales of goods with installation or assembly, sales on board of ships, aircrafts, and trains, and sales of energy. However, the updated version of the proposal excludes from the extended OSS regime sales of goods and services covered by special regimes (e.g., sales of second-hand goods and sales of works of art). The original proposal, which included the implementation of IOSS, has been withdrawn and will be included in the 2028 customs amendment.
Electronic invoicing and digital reporting
From 1 July 2030, e-invoicing and unified digital reporting will be mandatory for all cross-border transactions within the EU. Member states will also be able to introduce mandatory e-invoicing for domestic transactions. This system is intended to simplify and speed up the VAT reporting process. The updated version of the proposal extends the deadline for issuing e-invoices to 10 days from the date of the taxable supply, up from the original 2 days in the previous proposal.
Businesses in the EU should start preparing their accounting systems for these changes to ensure compliance with the new requirements. More detailed information can be found here.