The European Union has taken a significant step towards modernising VAT regulations with the official adoption of the VAT in the Digital Age (ViDA) package.

This comprehensive set of measures aims to simplify VAT compliance, reduce administrative burdens, and create a more level playing field for businesses operating within the bloc.

A progressive rollout until 2035

The newly adopted ViDA package outlines a phased implementation spanning over a decade, with key milestones set to transform VAT reporting and compliance:

• Immediate Changes: Member States will now have the authority to introduce mandatory e-invoicing, under specific conditions, streamlining VAT reporting for businesses. Additionally, enhancements to the Import One-Stop-Shop (IOSS) framework will facilitate better VAT controls and monitoring.

• January 2027: Minor legislative updates will impact users of the One-Stop Shop (OSS) and IOSS schemes, improving clarity and compliance measures.

• July 2028: Digital platforms involved in short-term accommodation rentals and passenger transport must adhere to new deemed supplier obligations, making them responsible for VAT collection. Furthermore, the introduction of the Single VAT Registration reforms and a mandatory reverse charge mechanism for non-identified suppliers will streamline VAT processes across Member States.

• July 2030: Digital Reporting Requirements will come into force for cross-border B2B transactions, ensuring a more transparent and efficient VAT system.

• January 2035: The final phase will see Member States with domestic digital real-time transaction reporting obligations align their systems with EU-wide standards, marking the culmination of the ViDA package.

Click here to find out more how this will affect short-term rentals in Malta, passenger transport services, and its challenges.