VAT in the Digital Age (ViDA) Potentially Delayed

Charles Riordan
November 20, 2023

In 2022, the European Commission published its “VAT in the Digital Age” initiative (ViDA), which would make widespread changes to current VAT rules under Council Directive 2006/112/EC (the EU VAT Directive). The Commission proposed an ambitious timeline for ViDA, with the first changes to take effect in January 2025. As with any amendment to the VAT Directive, ViDA requires unanimous approval from the Member States to take effect.

Now, in a sign that unanimity has not yet been achieved, the Committee on Economic and Monetary Affairs from the European Parliament has proposed to postpone most aspects of ViDA for at least one year. The committee cites ongoing delays in the legislative process as a reason for the postponement. The recommendation was decided on a nearly unanimous vote; no members voted against the measure.

The committee’s recommendation is non-binding, but it does signal that stakeholders are concerned about the Commission’s timeline. In particular, the ViDA package envisions EU-wide use of electronic invoicing standards and new digital reporting requirements, both of which could require a high level of technical infrastructure. Some Member States may be concerned about building the requisite infrastructure under a tight time frame. Another potential area of debate is the desire for harmonized e-invoicing requirements – the details of any such proposal could have large ramifications for countries who have already adopted e-invoicing or e-accounting mandates, such as Italy, Poland, France, and Spain. The delay might reflect a lack of consensus on what these details should look like.

If the Committee’s proposal is adopted as written, the revised launch dates for ViDA will be as follows:

  • E-Invoicing and Digital Reporting Requirements: Member States must implement administrative provisions for digital reporting requirements by January 1, 2029. The requirement for Member States to allow electronic invoicing, subject to common standards and without prior authorization from the tax authority, would take effect January 1, 2025.
  • Deemed Supplier Rules for Platforms: Member States must implement provisions to harmonize treatment of services facilitated by electronic platforms, and to impose deemed supplier rules for goods facilitated by electronic platforms, by January 1, 2026.
  • Single VAT Registration: Existing rules for VAT treatment of call-off stock would cease to apply as of December 31, 2025 [no change from original proposal]. Changes to Article 194 of the VAT Directive would take effect by January 1, 2026. Member States must implement provisions to expand the scope of non-Union and Union One-Stop Shop schemes by January 1, 2026.

As mentioned, the Committee’s recommendation is non-binding, and further changes to ViDA’s implementation dates could be proposed. Nevertheless, ViDA has a massive scope – at least as currently written – and would affect a large swath of taxpayers if implemented. Taxpayers operating in the European Union should keep a close eye on future developments.

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Charles Riordan

Charles Riordan is a member of the Regulatory Analysis team at Sovos specializing in international taxation, with a focus on Value Added Tax systems in the European Union. Charles received his J.D. from Boston College Law School in 2013 and is an active member of the Massachusetts Bar.
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