EU VAT update: Political agreement on ViDA Directive

On November 5, 2024, the Ecofin Council reached a political agreement on the VAT in the Digital Age (ViDA) directive after two years of negotiation. This legislative package introduces significant changes that will impact all businesses, with measures rolling out from 2025 through 2030.

Key components of the ViDA proposal:

1.      Digital reporting obligations:

Structured e-invoicing will become mandatory for cross-border B2B and B2G transactions within the EU, starting from July 1, 2030.

For local transactions, member states can begin requiring e-invoices as early as 2025 without prior approval from the EU Council, and recipients may also be required to accept e-invoices.

2.     Addressing the platform economy

From July 1, 2028, platform operators involved in certain accommodation services and passenger transport will need to handle VAT collection if individual providers do not. However, member states have the option to delay this requirement until January 1, 2030.

3.     Single VAT registration in the EU (Effective July 1, 2028):

The One-Stop-Shop (OSS) system will be expanded from July 1, 2028, to reduce the need for businesses to register for VAT in multiple member states. A mandatory reverse-charge mechanism will also be introduced for certain transactions with foreign suppliers.

What’s next?

The proposal will now go through the European Parliament for review and formal adoption before it becomes law. In the meantime, businesses should start preparing to adapt to these changes.

We are here to help you assess the potential impacts on your situation and support your preparations.