Council of the EU Adopts VAT in Digital Age (ViDA) Package

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The Council of the EU has adopted the ViDA package to streamline VAT processes and enhance digital reporting for businesses.

EU Tax Focus

On 11 March 2024, the Council of the European Union adopted the legislative measures under the VAT in the Digital Age (ViDA) package during the Economic and Financial Affairs Council (ECOFIN) meeting, following the reconsultation of the European Parliament.

The following legislative reforms have been unanimously agreed:

  • the Directive on VAT rules in the Digital Age (ViDA)
  • VAT Administrative Cooperation arrangements needed for the Digital Age).

The reforms aim to streamline VAT invoicing, ensure fair competition and reduce administrative burdens for companies engaged in cross-border trade. More specifically, the reforms will address the following:

  • comprehensive digitalization of VAT reporting obligations for companies selling goods and services to businesses in another EU Member State by 2030 (Pillar 1);
  • imposition on online platforms of VAT payment for short-term accommodation rentals and passenger transport services wherein individual service providers do not charge VAT (Pillar 2); and
  • expansion of online VAT One-Stop-Shop (OSS) schemes to remove impediments caused by registration requirements for VAT in every EU Member State.

Upon entry into force, EU Member States will be able to introduce mandatory e-invoicing under specific conditions, and enhancements will be made to the Import One-Stop-Shop (IOSS) framework for improved controls.

As a next step, the Directive, Regulation and Implementing Regulation all enter into force on the twentieth day following their publication in the Official Journal of the EU (OJEU).

More information is available here.