What is ViDA?
ViDA stands for VAT in the Digital Age. ViDA is the biggest VAT reform since the Single Market, proposed by the European Commission in 2022. After extensive negotiations the Council agreed on the proposal in November 2024 and the first step of the implementation took place as of the 1. of January 2025.
ViDA is a regulatory framework designed to modernize and ease VAT collection, adapt to the digital economy and prevent fraud.
ViDA consists of three pillars:
- E-invoicing and (semi) real-time Digital Reporting
- Updated rules and regulations for the Platform economy
- Single VAT registration
Why has ViDA been developed?
€99 billion were lost in VAT (Value Added Tax) revenues in the EU countries in 2020, according to the 2023 VAT Gap Report. Approximately one-quarter is estimated to be linked to VAT fraud in intra-EU trade.
To prevent VAT fraud and simplify VAT processes in association with cross-border trade, the EU introduces ViDA, a modernization of the VAT system to adjust to the digital economy. In addition, ViDA addresses the challenges with the online trade of short-term accommodation and transportation.
It is estimated that ViDA will help the EU countries collect up to €18 billion more in VAT revenues - annually. Anti-fraud measures alone will bring €11 billion. All while reducing the administrative burdens for companies and evening out the playing field of the platform economies.
How does ViDA work?
Each "Pillar" in ViDA seeks to solve a different problem within the VAT system, primarily concerning cross-border trade and VAT.
Pillar 1: Real time digital reporting system based on mandatory e-invoicing
All companies involved in cross-border trade must adapt to a common e-invoicing format using the standard demanded by ViDA and immediately report VAT data to the authorities.
Digital Reporting Requirements (DRRs) will be mandatory; all cross-border B2B transactions must use structured e-invoices following a common EU e-invoicing standard. This change ensures compliance and compatibility across the EU Member States and is estimated to lower administrative costs for businesses by some €1,4 billion annually.
Today VAT is typically reported monthly or every three months, creating a window of opportunity to commit fraud. With ViDA, cross-border transactions will be accounted for to the authorities in real time, hence helping them discover fraud at a much earlier stage.
Pillar 2: Updated rules for the platform economy
"Platform economy" is typically used to describe digital platforms facilitating vendors of the transport and short-term accommodation sectors, such as Über and Airbnb.
These platforms will be responsible for collecting and remitting VAT, when their users do not. This change will lighten the burden of small providers, who previously had to comply with different VAT rules in multiple EU countries, saving them approximately €8,7 billion in ten years.
This adjustment will ensure equal VAT rules and conditions throughout all of the EU for all providers of transport and short-term accommodation - digital and traditional.
Pillar 3: Single VAT Registration (SVR)
ViDA proposes one single VAT registration for all of the EU countries, expanding the existing OSS (One Shop Stop) model for e-commerce companies. This means companies selling to consumers in multiple EU countries can fulfil their VAT obligations via registration on one single online portal, in one language. In addition, ViDA introduces mandatory reverse charge mechanisms for certain B2B transactions.
Implementation Timeline
There are numerous deadlines, here are some of the major (preliminary) dates of implementations:
Early 2025
The EU member states may initiate mandatory e-invoicing for domestic companies without Council authorization.
2028
Single VAT Registration (SVR) and voluntary Platform Economy changes.
2030
DRRs become mandatory for cross-border transactions and optional for domestic transactions. Platform Economy changes become mandatory.
2035
Complete harmonization of national e-invoicing systems across the EU.
How will ViDA impact my business?
The ambition of ViDA is to streamline and simplify cross-border custom processes through the SVR and mandatory e-invoicing, while also reducing fraud and lowering administrative costs.
What will you need to do?
- Implement a solution for e-invoicing
- Meet the Digital Reporting Requirements (DRRs)
- Prepare for Single VAT Registration
Which benefits will this give?
- VAT will be collected fairly and efficiently
- VAT declaration is simplified through the Single VAT Registration (SVR)
- Improvements to compliance and lowered administrative costs
- Platform economies and traditional providers are given equal conditions
Is your company prepared for the next steps?
The European Commission is currently in the process of developing secondary legislation and technical framework, seeking to assist the EU Member States and the business community facilitating a smooth implementation of ViDA.
For businesses, early preparation is the key to success - and choosing the right service provider for electronic invoicing is essential.
If you need an e-invoicing service provider to help you on the way - feel free to contact us for a talk!