EU Council Reached Political Agreement on ViDA

Platforms

VAT reporting liabilities will be extended for digital intermediary platforms. E.g. the VAT liability of platforms for supplies by non-EU suppliers will be extended to capture all supplies of goods by non EU sellers taking effect 1 January 2027. The VAT liability of platforms will not be extended to supplies of goods in the EU by EU sellers. Businesses offering passenger transport by road and short-term accommodation rental through platforms and platforms that facilitate these services will also have to apply new VAT rules. In addition, the VAT place of supply will be amended to achieve that VAT on B2C facilitation services provided by all platforms will become due in the Member State where the underlying transaction takes place.

E-invoicing/digital reporting

A mandatory electronic invoice requirement will be introduced for cross-border B2B supplies of goods and services within the EU. The eInvoice will have to be issued within 10 days following the cross-border supply of goods or services and for self invoices the term will be 5 days. This requirement will apply as from 01.07.2030, from which date paper invoices or pdf invoices for example will no longer be allowed for the mentioned type of transactions.

An e-invoice is an invoice that is issued, transmitted, and received in a structured data format which allows automatic processing. An e-invoice should contain the invoicing details in a machine-readable format that can be automatically imported into the accounts payable system of the customer without manual entering.

Upon formal adoption of the ViDA proposal EU Member States can choose to introduce mandatory e-invoicing to domestic transactions without prior consent from the EU.

Different from the original proposals, holding an e-invoice for eligible transactions will become a substantive condition to VAT deduction or reclaims. Initially the ViDA proposal prohibited the use of summary invoice, but this has now been dropped. Summary invoices may still be issued provided that the VAT on the invoice is chargeable in the same month and the summary invoice is issued by the 10th of the following month.

From 01.07.2030, the cross-border B2B supplies of goods and services within the EU will also need to be electronically reported to the tax authorities when the invoice is issued or should have been issued. The supplier and the customer will both have to report the transaction, although Member States may exclude the customer from this reporting obligation. With this real time reporting requirement, the periodic European Sales Listings will disappear. Next to the information currently reported on the ESL, also bank details need to be reported.

Member States may also require other transactions to be reported in a transaction-based way, for example domestic transactions. Member States will however be allowed to keep their existing e-invoicing and digital reporting tools for domestic transactions – for example the SAF-T – but should ensure that these systems are interoperable with the EU system for cross-border transactions as of 1 January 2035.

Member States which have launched a domestic real-time reporting regime after 1 January 2024 must harmonize to the EU ViDA standard.

One Single VAT Registration (SVR)

A mandatory VAT reverse charge mechanism will be introduced for all supplies of goods and services performed by a supplier that is not established nor has a VAT registration in the Member State in which the VAT is due and its customer holds a VAT registration in that Member State (as from 01.07.2028).

The scope of the One Stop Shop (OSS) scheme for foreign VAT payments will be extended per 1 January 2027 to include the supply of gas, electricity, heat and cooling through systems. The OSS scheme will be further extended as of 1 July 2028 to also cover domestic and installation supplies of goods by suppliers that are not established nor have VAT registration in the Member State in which the VAT is due. This will ensure that businesses will not have to register for VAT in foreign countries in situations where the VAT reverse charge mechanism is not applicable.

From 1 July 2028, it will also be possible for businesses to report EU cross-border transfers of own goods in the OSS return, including the subsequent domestic sale. The existing VAT simplification for call-off stock will then be annulled.

In conclusion, the forthcoming VAT reforms under the ViDA proposal mark a significant shift towards a more unified and digitized VAT system across the EU. The introduction of mandatory e-invoicing, real-time digital reporting, and streamlined VAT registration processes aims to reduce administrative burdens, increase transparency, and improve tax compliance for cross-border transactions. As we approach these deadlines, companies should prepare to adapt to new reporting technologies and processes to ensure seamless compliance. Pincvision is here to support you through this transition. Would you like or our help or advice? Let us know below ⬇️⬇️