The ViDA proposal focuses on improving VAT efficiency, minimising VAT fraud and reducing foreign VAT registration obligations. Thereto, the new rules will introduce digital reporting requirements for cross-border transactions, require platforms to pay VAT on short-term accommodation rental and passenger transport services and will expand existing VAT simplification schemes to minimise foreign VAT registration obligations for businesses.

The measures introduced in the ViDA proposal will impact all businesses and particularly those carrying out cross-border transactions and platform companies. Businesses will have to amend their invoicing and VAT reporting processes. Businesses will further have to assess whether their foreign VAT registrations are still required after the implementation of ViDA proposal. The ViDA proposal also introduces new obligations and liabilities for platforms that facilitate supplies of goods. Businesses offering passenger transport by road and short-term accommodation rental through platforms and platforms that facilitate these services will also have to apply new VAT rules.

The European Parliament will now be consulted on the amended ViDA proposal. The ViDA proposal should subsequently be formally adopted by the Council of the EU. This procedure – which should be seen as a formality – is expected to be finalised early 2025.

We will keep you updated on further developments. Should you have any questions or need advice, please contact one of our VAT advisers.  

What are the changes?

The ViDA proposal consists of three pillars: (1) digital reporting requirements (2) the single VAT registration and (3) the VAT treatment of the platform economy.

E-invoicing

Taking effect 1 July 2030, e-invoicing will become the default for cross-border B2B supplies of goods and services within the EU. As a main rule, an e-invoice will have to be issued within 10 days following the cross-border supply of goods or services. An invoicing deadline of 5 days will apply to self-billing.

An e-invoice is an invoice that is issued, transmitted and received in a structured data format which allows automatic processing. An e-invoice should contain the invoicing details in a machine-readable format that can be automatically imported into the accounts payable system of the customer without manual entering. This definition of an e-invoice excludes – for example – pdf-invoicing via email or the issuing of paper invoices.

Upon formal adoption of the ViDA proposal, expected early 2025, Member States can choose to impose e-invoicing requirements to domestic transactions without prior consent at EU level. As of 1 July 2030, Member States may require businesses to possess of a valid e-invoice to effectuate a VAT credit for domestic purchases if those domestic purchases are subject to domestic digital reporting requirements.

Transaction based reporting

Taking effect 1 July 2030, the cross-border B2B supplies of goods and services within the EU will have to be reported to the tax authorities electronically in real time when the invoice is issued or should have been issued. The supplier and the customer will both have to report the transaction, although Member States may exclude the customer from this reporting obligation. Member States will have to provide the electronic means for the reporting such transactions.

It will as of that date no longer be required for businesses to submit periodical EC Sales Listings. Under the new digital reporting requirements, businesses will also have to report bank details. This will enable tax authorities to track the financial flows.

Member States may also require other, e.g. domestic, transactions to be reported in a transaction-based way. Member States will however be allowed to keep their existing e-invoicing and digital reporting tools for domestic transactions – for example the SAF-T – but should ensure that these systems are interoperable with the EU system for cross-border transactions as of 1 January 2035.

The ViDA proposal aims to reduce VAT compliance obligations by minimising foreign VAT registration obligations for businesses involved in cross-border transactions. The idea is that businesses will have to maintain one single VAT registration in only one Member State.

Taking effect already as of 1 July 2028, a mandatory VAT reverse charge mechanism will be introduced for all supplies of goods and services where the supplier is not established nor has a VAT registration in the Member State in which VAT is due and its customer maintains a VAT registration in that Member State.

The scope of the One Stop Shop (OSS) scheme for foreign VAT payments will be extended per 1 January 2027 to cover the supply of gas, electricity, heat and cooling through systems. For certain transactions, the OSS scheme enables a business to report and pay VAT in multiple Member States via one OSS return filed in one Member State. The OSS scheme will be further extended as of 1 July 2028 to also cover domestic and installation supplies of goods by suppliers that are not established nor have VAT registration in the Member State in which the VAT is due. This will ensure that businesses will not have to register for VAT in foreign countries in situations where the VAT reverse charge mechanism is not applicable.

The current VAT legislation contains a simplification for call-off stock arrangements. From 1 July 2028, it will also be possible for businesses to report EU cross-border transfers of own goods in the OSS return, including the subsequent domestic sale. The existing VAT simplification for call-off stock will be phased-out.

VAT reporting liabilities will be further centered around digital intermediary platforms.

Platforms facilitating supplies of goods

Platforms are liable for VAT since 1 July 2021 when facilitating (1) supplies of goods in the EU by non-EU suppliers to EU consumers and (2) import sales of goods to EU consumers with a value not exceeding EUR 150.

The VAT liability of platforms for supplies by non-EU suppliers will be extended to capture all supplies of goods taking effect 1 January 2027. The VAT liability of platforms will not be extended to supplies of goods in the EU by EU sellers.

The ViDA proposal will also not affect the VAT rules for platforms that facilitate import sales of goods. However, it is expected that the Customs Reform proposal will – amongst others – abolish the current EUR 150 threshold. This would effectively make platforms liable for VAT on all import sales to EU consumers.

Platforms that facilitate import sales are allowed to make use of the Import One Stop Shop (IOSS) to declare the VAT to the various EU countries. The import itself is exempt from VAT if the IOSS number is presented to Customs. To prevent the fraudulent use of IOSS numbers, the ViDA proposal enables the European Commission to implement measures starting early 2025, which include linking the import consignment number to the IOSS number of the supplier.

Earlier versions of the ViDA proposal also included a new platform liability for fulfillment platforms facilitating intra-EU shipments of own goods by businesses. This VAT liability is not included in the current ViDA proposal.

Platforms facilitating the provision of services

A new VAT liability will be introduced for platforms facilitating short-term accommodation rental for a maximum of 30 nights and passenger transport by road. The implementation of this liability is optional as of 1 July 2028 and mandatory as of 1 January 2030.

The platform will however not be held liable for VAT if the supplier provides its VAT number to the platform operator and declares that it will charge VAT on its services. Member States may choose to disregard the VAT liability for the platform if the underlying service provider makes use of the VAT exemption for small enterprises. However, platforms will nevertheless be required to collect and store information for short-term accommodation rental and passenger transport services, also if they are not liable for VAT for these services. 

A platform will not be allowed to make use of the margin scheme for travel and tour operators. This means that a platform will be liable for VAT on the full sales price paid by the customer as opposed to merely its own intermediation fee. The new VAT liability for platforms will not apply to supplies made under the margin scheme for travel and tour operators.

New VAT rules for facilitation services

The VAT place-of-service rules will be amended to achieve that VAT on B2C facilitation services provided by all platforms will become due in the Member State where the underlying transaction takes place.