The pace of change for EU policy initiatives is notoriously glacial. It’s therefore little surprise that, having first been mooted in December 2022, it has taken 18 months for the bloc’s proposed VAT reforms to make it back to the table.
However, it is clear that changes to the VAT regime for B2B cross-border trade within the EU are coming. Revised proposals put forward by the European Commission in May could be approved this summer – although full implementation of the plans would not be complete before 2030.
At their heart, the VAT in the Digital Age (ViDA) proposals are aimed at simplifying VAT compliance for B2B trade across the bloc, particularly for businesses that operate in multiple jurisdictions. It is also believed that standardised reporting requirements will close loopholes that can be exploited for VAT fraud, while there is a long-standing interest in modernizing tax administration in general to bring the so-called platform economy (i.e. major digital players like Airbnb and Uber) into line with other businesses.
So what are the proposals, who will they affect, and how? The reforms are split into three ‘pillars’, as follows:
E-invoicing and digital reporting
At the heart of the ViDA plans is the principle that all invoicing and VAT reporting for B2B cross-border trade within the EU should be digitised. The current proposals suggest suppliers being required to issue e-invoices within 10 days of the date of supply. Both suppliers and customers will be required to submit details of transactions for VAT purposes using a new centralised digital system, although current drafting suggests member states will retain the power to waive this requirement for customers.
For domestic supplies within member states, e-invoicing and digital VAT reporting will remain optional. But where they are introduced, they must conform with the cross-border EU system.
The working date for full implementation is Jun 2030.
Platform transactions
In a set of proposals specifically targeting digital accommodation platforms like Airbnb and ride-sharing/transportation apps like Uber, ViDA proposals will make the platform the deemed supplier responsible for VAT when the de facto supplier is not required to account for VAT. Changes to the original wording suggest that member states will be able to opt-out of this in certain circumstances.
These changes have been pencilled in for implementation by July 2027.
Single VAT registration
The third and final pillar of the ViDA proposals will allow traders to register for VAT in just one member state and fulfil all reporting requirements there, rather than having to register for VAT in all member states they do business in as non-established traders. In another change, member states will be able to apply a reverse charge regime in situations where B2B supplies come from another jurisdiction to a customer registered for VAT in their country, collecting tax owed directly from the customer rather than the supplier.
These changes are also expected to be in place by July 2027, although an earlier date of 1 January 2026 has been suggested for supplies of electricity, natural gas, and cooling/heating services.
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