VAT in the Digital Age – What it means for UK businesses

What is VIDA? 

VIDA is a major update to the EU VAT system and will materially affect the VAT compliance requirements of businesses operating in the EU.

The package is built around three pillars aimed at modernising VAT compliance and reducing fraud:

Digital reporting & e‑invoicing

• From July 2030, cross border B2B transactions will require structured e-invoicing using EU standard formats.
• Member States can require domestic e-invoicing earlier and many are already preparing to do so.
• The UK is also planning its own e‑invoicing regime and is currently consulting on the design, creating opportunities to align with EU standards.

Platform economy reforms

• From July 2028, digital platforms will become responsible for collecting and remitting VAT on short‑term accommodation and passenger transport where the underlying supplier does not account for VAT.
• A new place‑of‑supply rule will apply to B2C facilitation services, taxing them where the underlying service occurs.

Single VAT registration

•  The extension of the One Stop Shop (OSS) regime and new rules on the transfer of own goods will significantly reduce the need for multiple VAT registrations across the EU. 

Implementation timeline

Impact on UK Businesses

Even outside the EU, UK companies will be significantly affected because VIDA changes apply to any business trading within the EU’s VAT jurisdiction, this could even be as simple as purchasing from local EU suppliers.

The biggest impact for most is likely to be the e-invoicing/ e reporting changes (which countries are starting to introduce imminently) as these are likely to increase administrative workload. UK businesses may be required to have access to a compliant platform and issue compliant e-invoices to continue their EU based activity.  

Some elements may reduce compliance burdens, such as the extended reverse charge and OSS, potentially cutting the need for multiple VAT registrations.

The overall impact of the VIDA changes will depend on the exact activities in the EU. Organisations should monitor developments and prepare early to avoid disruption.

Our Indirect Tax experts would be happy to discuss the practical implications that VIDA may have to your organisation.