The “VAT in the Digital Age” package came into force today. What changes does it bring?
The VAT in the Digital Age reform (ViDA for short) was passed by the European Parliament in February and officially approved by the European Council on 11 March. The changes were subsequently published in the Official Journal of the EU and enter into force today (14 April).
Most of the changes are incorporated in the amendment to Council Directive 2006/112/EC on the common system of value added tax (Directive) and are partly regulated by the Council Regulation on VAT administrative cooperation arrangements, and the Council Implementing Regulation as regards information requirements for certain VAT schemes.
ViDA, as a major VAT reform, introduces changes structured around the three key pillars outlined below, which EU Member States will gradually introduce into their national legislation over a three-to-five-year period. The target date for the full harmonization of local digital reporting and e-invoicing rules is January 2035. However, some changes will apply immediately upon the entry of this regulation into force in order to facilitate implementation.
The first pillar governs the Digital Reporting Requirements (DRR) and mandatory electronic invoicing (e-invoicing), which represent the most significant change especially for VAT payers trading in the EU. It brings changes to software and IT solutions and the entire system for issuing and receiving invoices, including the deadlines for their issuing, and introduces the obligation to report data to the tax administration in near real time.
The deadline for mandatory implementation of DRR and e-invoicing is July 2030 for intra-community transactions, when full harmonization of rules for established local mandate is set for January 2035. Because of derogation, Member States can introduce e-invoicing at the national level for domestic business transactions as soon as the Directive amendment comes into force without needing approval from the European Commission.
The second pillar regulates the digital platform economy. The changes mainly concern short-term accommodation and passenger transport services. A new “deemed supplier” rule will be introduced, under which the online platform facilitating the services will be responsible for the collection and remittance of VAT.
The deadline for mandatory implementation is January 2030. However, Member States have the option to implement it voluntarily as of July 2028.
The third pillar focuses on simplifying mandatory registration in EU Member States by adjusting the single VAT registration system and expanding of the One Stop Shop (OSS) regime. The changes also concern the movement of own goods between states, which will now be included in this reporting, and the abolition of the call-off stock regime. Certain changes will also affect the IOSS regime.
The implementation date is July 2028, but partial expansion of the OSS regime to include selected transactions will take place as early as January 2027.
The aim of the package is to fundamentally modernise and digitise the VAT reporting system and combat tax fraud and evasion, in particular, in intra-community and chain transactions, where tax evasion is most common. Another goal is to reduce the administrative burden.
Current projection for the first pillar
In some EU countries, e-invoicing and DRR have already been locally implemented in some form, awaiting only harmonisation with the new regulations, while other states plan to introduce them in the coming months or years. The development in the Czech Republic is still unclear, and it remains to be seen whether the changes will be implemented around 2028 or if the implementation will align with the mandatory deadline. Slovakia is planning to implement the changes in 2027.
The adoption of e-invoicing in other EU countries may also affect domestic companies trading in the EU that have branches in the relevant Member States. The obligation to accept electronic invoices at the local level may be introduced by states from the moment the amended Directive comes into force. However, this obligation should only apply to companies and branches established in the relevant country.
Although it may seem that the implementation of e-invoicing and meeting the set requirements in the Czech Republic are still far ahead, it is crucial to understand the proposed changes in time and choose the appropriate measures in relation to your own business, in particular, in the area of IT solutions and systems for issuing and receiving invoices.
We will continue to monitor the situation closely and keep you informed of any new developments. We are already preparing documents on the individual pillars to help you get ready for the upcoming changes.
If you have any questions or would like further information or consultations, please do not hesitate to contact us.
