Some changes will take effect immediately upon the directive’s implementation, while others will roll out gradually over the coming years. The proposal will now proceed to formal approval by the EU Parliament and the Council of the EU before it is officially adopted and implemented across the EU.
The agreement reflects three key elements:
- Detailed breakdown of the amendments impacting e-invoicing obligations.
- The new Digital Reporting Requirement (DRR).
- The indicative timeline for these changes.
Goals and challenges of ViDA
The ViDA package seeks to modernise and streamline VAT systems across the EU, particularly in the areas of e-invoicing and Continuous Transaction Controls (CTC). The proposal aims to harmonise diverse VAT frameworks across Member States, reduce administrative burdens, improve VAT compliance and combat fraud.
Why has implementation been delayed?
The delayed implementation is attributed to:
- Complexity of objectives: Harmonising VAT systems across Member States is a significant undertaking.
- Diverse stakeholder concerns: Concerns raised during the drafting process included implementation costs, alignment with EU data privacy regulations and varying national priorities.
- Approval process: The ViDA package requires formal approval by both the European Parliament and the Council of the EU.
Despite these challenges, the ViDA reforms are expected to deliver substantial benefits to businesses and public administrations, promoting efficiency and uniformity in the digital age. This will only become known in time and will necessitate review and refinement based on practical operation.
Key changes introduced by ViDA
Immediate reforms upon adoption.
- Removal of EU approval for domestic e-invoicing:
Member States will no longer require EU approval to mandate domestic B2B e-invoicing, provided the obligation applies only to established taxpayers. - Elimination of buyer consent for e-invoices:
The current requirement for buyer acceptance of e-invoices under the VAT Directive will be removed in Member States with mandatory domestic e-invoicing.
Reforms effective from 1 July 2030
1. Redefinition of electronic invoicing.
- E-invoices will need to be issued, transmitted, and received in a structured electronic format to allow automated processing.
- Formats like pure PDFs or JPEGs will no longer qualify, though hybrid formats may remain acceptable if their structured portion complies with standards.
- In principle, e-invoices must adhere to the European standard (EN format) under Directive 2014/55/EU. Member States may adopt alternative standards for domestic transactions, subject to conditions.
From 2030, B2B e-invoices compliant with the European standard will be the default and no longer requiring buyer acceptance. However, if a Member State opts for a different mandatory domestic standard, they may either waive or require buyer acceptance for e-invoices using the European standard.
2. Digital Reporting Requirements (DRR) for cross-border transactions.
- Near-real-time reporting: From 2030, businesses engaging in cross-border transactions within the EU must electronically report invoice data in near real-time using the EN format.
- Reporting deadlines:
- E-invoices must be reported within 10 days after the chargeable event.
- Invoices issued by the recipient on behalf of the seller (known as self-billing) and intra-community acquisition invoices must be reported within five days of issuance or receipt.
- Conditions for VAT exemptions: DRR compliance will be a prerequisite for claiming VAT exemptions on cross-border transactions or input VAT recovery.
- DRRs may be conducted by the accountable person or outsourced to a third party on their behalf.
Digital Reporting Requirements for domestic transactions
- ViDA grants EU Member States the option to mandate digital reporting for domestic B2B/B2C sales, purchase data, and self-supplies for VAT-registered taxpayers within their jurisdiction.
- Domestic DRRs must align with ViDA’s cross-border standards and EU Member States must permit submissions in the European standard format, although other approved interoperable formats may be allowed.
- Transitional arrangements allow for EU Member States with domestic real-time reporting systems in place as of 1 January 2024, to adopt compliance with ViDA’s standards by 2035.
- The proposal clarifies that other reporting obligations, such as SAF-T, can still exist. This alignment will ensure consistency across the EU in preparation for full ViDA implementation.
Member States have until 30 June 2030 to integrate ViDA’s e-invoicing and DRR provisions into their national legislation, making the Directive effective across the EU by 1 July 2030.
Required preparation for ViDA by businesses
The ViDA package represents a significant shift and required change of transaction reporting for businesses operating within the EU. To comply, businesses should:
- Upgrade invoicing and reporting systems: to handle structured e-invoicing and real-time reporting requirements.
- Engage with competent advisors: to navigate the complex changes and ensure seamless implementation.
- Start early: Preparing ahead allows adequate time for system testing, stakeholder engagement, and compliance before the 2030 deadline.
ViDA is expected to bring long-term benefits, including reduced administrative burdens, enhanced VAT accuracy, and reduced fraud. However, its success will depend on effective preparation, adaptation, and ongoing review during practical application.
If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of our VAT team.