ViDA applies to all businesses that sell goods or services in the EU, irrespective of whether they are established in an EU Member State or not. The three main pillars of ViDA are:
To introduce Digital Reporting Requirements (DRR), modernising the process of invoicing and moving to mandatory e-invoicing on intra-EU business-to-business (B2B) transactions (from 1 July 2030);
To introduce a deemed-supplier rule for platforms that facilitate short-term accommodation rentals and passenger transport services by road (from 1 July 2028 or 2030); and
To reduce the need for multiple VAT registrations through an expansion of the One-Stop Shop (OSS). This will lead to the introduction of a specific scheme for the transfer of own goods and a mandatory application of the reverse charge mechanism (from 1 July 2027 for the supply of electricity and 1 July 2028 further extension of the OSS schemes and mandatory reversed charge mechanism).
Electronic invoicing: The new standard
Electronic invoicing will soon become the default system for issuing and receiving invoices. Invoices issued, transmitted, and received in an electronic format that allows for automatic electronic processing will be considered an electronic invoice and must comply with the European Standard (EN16931). Unstructured formats, such as PDF invoices, will no longer be acceptable. However, hybrid invoices (a combination of PDF and structured XML) will be permitted. Member States may authorise other invoice formats for domestic transactions.
For cross-border transactions, electronic invoices must be issued within 10 days after the chargeable event. Summary invoices for sales made within the same calendar month are still permitted and should be issued within 10 days after the end of the calendar month.
Impact on existing e-invoicing and e-reporting requirements
Although real-time reporting of domestic transactions is not required under the EU VAT Directive, should a Member State opt to implement such a system, it must align with the digital reporting requirements for cross-border supplies. Member States cannot impose additional general transaction-based reporting requirements but may retain requirements such as SAF-T and cash registers.
The ViDA reform marks a new era for VAT in the digital economy, coinciding with the rapid global growth of VAT and digital reporting. This reform will result in significant process changes for businesses, necessitating a careful assessment of the rules, strategic planning and additional resources. Embracing the substantial increase in data and technology use will be a key feature of this transition. Tax authorities will also need to adapt their systems to manage the new digital and data landscape effectively while providing robust support to businesses to ensure a smooth and mutually beneficial transition.
After the ECOFIN meeting, a decision to consult with the European Parliament again on the compromise text will have to be taken through a simplified written procedure in view of the substantial differences between the EC proposal and the latest compromise text. This approval should be forthcoming because the start dates are well into the future and the compromise text reflects a balance of factors.
The ViDA-package contains miscellaneous changes to the EU VAT Directive. For this reason, it is important to start preparing on time for these changes and implementations in order to be compliant when they enter into force. Especially since those related to e-invoicing and digital reporting requirements will be challenging for many businesses.
Certain Member States have already introduced or announced the introduction of e-invoicing. Therefore, businesses should start considering their geographical footprint and where e-compliance implementations are taking place, as well as reviewing their IT landscape and related invoicing processes. Furthermore, businesses that act as platform companies should determine the impact on their business model.
How can we help?
At PwC, we understand the complexities and challenges that come with managing indirect tax functions and adapting to e-invoicing changes. Our team of experts offers strategic planning advice to help you navigate these changes seamlessly.
Our dedicated VAT and tax policy team works closely with PwC’s tax technology experts, the global PwC network, and leading external software providers. This collaboration allows us to offer up-to-date advice and optimal preparation strategies for global VAT changes, tailored specifically to your business needs.
By partnering with PwC, you gain access to a wealth of knowledge and resources that will help you stay ahead of the curve in the ever-evolving landscape of VAT and e-invoicing. Contact us today to ensure your business is prepared for the future of VAT in the digital age.
For a deeper discussion of how these proposals might affect your business, please contact us.
