VIDA regulation adopted—what does that mean for business?

On 11 March 2025, the European Union adopted the VAT in the Digital Age Package (ViDA) 27 months after its initial proposal by the European Commission in late 2022. The ViDA’s goals are revolutionizing the Value-Added Tax (VAT) system in three critical areas. As a result, significant changes will be made to the EU VAT system starting 1 January 2027.

Firstly, it mandates the digitalization of VAT reporting by 2030. Secondly, it requires online platforms to collect VAT on short-term accommodation and passenger transport services. Lastly, it expands the online VAT one-stop shop, simplifying cross-border VAT registration for businesses operating within the EU.

The new rules will come into effect 20 days following their publication in the Official Journal of the EU. Member States will be required to transpose the directive into their national laws.

Although many of the rules will be implemented in the coming years, some will take effect immediately. Importantly, Member States will now have the right to introduce mandatory domestic electronic invoicing without needing prior authorization from the EU.

As a reminder, VIDA refers to:

1. Digital Reporting Requirements: The ViDA package introduces Digital Reporting Requirements (DRR), set to modernize the invoicing process and mandate e-invoicing for intra-EU business-to-business (B2B) transactions starting from 1 July 2030.

2. Deemed-Supplier Rule for Platform Companies: A deemed-supplier rule will be implemented for platforms that facilitate short-term accommodation rentals and passenger transport services by road. This rule is scheduled to take effect from either 1 July 2028 or 1 July 2030, depending on the specific timeline set by the EU.

3. Single VAT Registration and Reverse Charge: To reduce the need for multiple VAT registrations, the ViDA package expands the One-Stop Shop (OSS) and introduces a specific scheme for the transfer of own goods. Additionally, the mandatory application of the reverse charge mechanism will be implemented. This will take effect from 1 July 2027 for the supply of electricity and from 1 July 2028 for the further extension of OSS schemes and the mandatory reverse charge mechanism.

The first measures that will be applied are:

• Changes to Supplies by Platforms: effective 1 January 2027, electronic platforms facilitating intra-community supplies will be deemed to purchase and supply goods not only to non-taxable persons but also to taxable persons and non-taxable legal entities whose acquisitions are exempt from VAT. This change aims to streamline the tax collection process for digital platforms operating within the EU.

• Phasing Out of Call-Off Stock Regime: The current VAT rules for call-off stock will be gradually phased out from 1 January 2027 to 30 June 2029. The existing rules will only apply to stock in place before 30 June 2028, after which the new regulations will fully take effect. This phased approach is intended to provide businesses with ample time to adjust to the new requirements.

• Modifications to OSS Schemes and VAT refunds: Starting 1 January 2027, several changes will be introduced to the One-Stop Shop (OSS) Union Scheme. Taxable persons registering under the OSS Union Scheme will lose the option to tax distance sales at their business location and will no longer be able to apply cash accounting. Additionally, Member States will have the authority to require tax representatives for VAT refunds under the 13th Directive.

• Changes to Short-Term Accommodation and Transport: From July 1, 2028, electronic platforms facilitating short-term accommodation (up to 30 days) and passenger transport will be deemed to have supplied the services themselves, with certain exceptions. Member States may also require validation of VAT numbers and can exclude domestic supplies made by small enterprises from this provision.

• Abolishment of register and recap statement: effective from 1 July 2029, the requirement for a register for transfers of goods and related reporting in the recap statement will be eliminated.

• Introduction of Digital Reporting and Electronic Invoicing: Starting 1 July 2030, real-time data reporting will replace recap statements for intra-community supplies. Additionally, electronic invoicing will become mandatory, with new definitions and requirements ensuring compliance with EU standards. This includes the immediate transmission of data for specific transactions, enhancing accuracy and efficiency in VAT reporting.

• Domestic digital reporting options: Member States will have the option to require digital reporting for domestic transactions. This includes mandating real-time data transmission for e-invoices and allowing flexibility in the types of transactions and taxable persons subject to these requirements. However, all measures must adhere to EU electronic invoicing standards to ensure consistency and reliability across the region.

The ViDA package represents a step towards modernizing VAT processes in the digital era. It promises to streamline procedures for businesses and improve cross-border efficiency, marking a new chapter in the EU's tax administration.