Skip links

VAT in the Digital Age approval not yet reached; new timetable for implementation emerges

EU countries have yet to reach an agreement on the proposed implementation of the bloc’s flagship VAT in the Digital Age (ViDA) scheme, despite a compromise measure being considered at the most recent meeting of the Economic and Financial Affairs Council (ECOFIN).

Estonia has previously vetoed full approval of the three-pillar proposal; arguing it has doubts around the second pillar which would mandate ride and accommodation sharing platforms to account for VAT on behalf of their online traders.

In particular, it feared such a move would disproportionately hamper smaller traders that currently operate below the VAT registration threshold.

Belgium, which currently holds the presidency of the EU Council, put forward a compromise that would have allowed member states to opt out SME platforms as well as use a new database designed to manage eligible traders.

But this has not yet won over Estonia and encouraged it to remove its veto to allow unanimous agreement on Pillar 2 of ViDA to be reached.

However, at last month’s ECOFIN meeting, member states approved Pillars 1 and 3, relating to Digital Reporting Requirements and Single VAT Return respectively.

This leaves the second pillar as the only obstacle still to be overcome before the ViDA implementation wins EU approval and moves towards inception.

What is the latest ViDA timetable?

The failure of member states to agree to Pillar 2 means the proposed introduction dates for each of element of ViDA have been delayed from those outlined when the scheme was first announced in December 2022.

Below is the most likely timetable for ViDA implementation based on the latest information:

2024 – ViDA agreement

Once member states have approved the ViDA legislation in full, the following steps will occur:

  • EU countries will be free to impose domestic transaction e-invoicing schemes without directive derogation approval from the European Council.
  • Customer agreement will no longer be required for e-invoices to be issued. This means businesses must be prepared to accept e-invoices if a member state opts to introduce a domestic e-invoicing regime.

2026 – Modifications to e-commerce rules

  • The current €10,000 threshold on B2C distance selling goods will be clarified and businesses will be allowed to apply their home country’s VAT on cross-border B2C sales.
  • Sales of natural gas, heating and cooling energy can be reported via OSS.

2027 – Single VAT Registration and Platform Economy

Pillar 2 (Platform Economy) and Pillar 3 (Single VAT Registration) were originally due to be introduced in January 2025; however, they are now scheduled for January 2027.

Pillar 2: Platform Economy

The platform economy regulations under ViDA specifically refer to online marketplaces, platforms and apps that facilitate short-term accommodation rentals and passenger transport.

From 2027:

  • Platforms will become the deemed supplier for VAT purposes, meaning they must charge and collect the tax on behalf of their suppliers. However, there are two exceptions to the above. Member states will be permitted to exclude suppliers that either:
    • Provide them with a VAT number.
    • Declare their own intention to charge VAT.
  • The place of supply for platform-based services will be where the transaction takes place.
  • Member states must apply the reverse charge when a seller that is not established in a member state sells goods or services to a VAT-registered customer in that member state.
  • Short-term accommodation will cover any stays of 30 days or less; revised down from the previous definition of 45 days to ensure consistency between member states.

Pillar 3: Single VAT Registration

This will build upon the existing VAT One Stop Shop in use across the EU for online shopping firms and allow companies selling to customers based in another EU member state to register for VAT purposes in just one country; from where all their VAT obligations for the entire EU will be fulfilled.

From 2027:

  • The OSS Return will be extended to include e-commerce and stock movements across EU borders, allowing thousands of e-commerce and B2B sellers to reduce foreign VAT registrations.
  • Businesses – especially SMEs – are predicted to save €8.7 billion in registration and administrative costs.
  • Businesses will benefit from using a single online portal in one single language for all EU VAT reporting.
  • Sellers based outside the EU will use the country of dispatch of the goods as their member state of identification.

2030 – Digital Reporting Requirements

Pillar 1: Digital Reporting Requirements

The new Digital Reporting Requirements pillar will see real-time digital reporting for VAT introduced across the EU; based on e-invoicing regimes that will provide member states with the data they need to tackle VAT fraud.

From 2030:

  • E-invoices will become the default method of invoicing and will be mandatory for any transaction that is within the scope of ViDA.
  • Member states will have the power to allow other invoicing formats for domestic sales.
  • Digital Reporting Requirements will be mandatory for all B2B intra-EU sales and purchases of goods and services subject to mandatory reverse charge.

For more information on how we can support your business to prepare itself for ViDA and worldwide e-invoicing mandates, get in touch with our team today.