Emma Broderick, Partner & Head of Indirect Taxes, Grant Thornton: Following a very extended period of consultation and deliberation, the European Commission’s VAT in the Digital Age (ViDA) proposal was unanimously agreed at the EU Finance Ministers’ ECOFIN meeting on November 5, 2024.

ViDA is organised around the following 3 ‘pillars’, and is expected to bring about major changes to the EU VAT system:

1. E-invoicing and Digital Reporting
From 1 January 2030, electronic invoices will be the standard invoicing method for cross-border EU transactions. Structured, machine-readable e-invoices will need to be issued by suppliers no later than 10 days following the chargeable event, and additionally, key components of that e-invoice will need to be digitally reported to the relevant tax authorities directly thereafter.

Customers will also need to be able to digitally report information from that e-invoice within 5 days of receiving it from the supplier and while it is open to Member States to potentially waive this requirement, it is expected that a valid e-invoice will ultimately be a key requirement to support VAT recovery.

These requirements will apply from 1 July 2030, with a compromise solution for Member States with existing domestic e-invoicing and reporting requirements. Full harmonisation of EU e-invoicing and digital reporting requirements may not be achieved until 2035.

2. Platform Economy
From 1 July 2028 (or 1 July 2030 at the latest), electronic platforms facilitating short-term accommodation rentals and/or passenger transport will be liable to collect and remit VAT on these services, unless the underlying service provider is VAT registered and undertakes to itself operate VAT. There is an option for Member States not to designate the platform as the deemed supplier if the underlying supplier qualifies for and chooses to utilise the EU’s separate SME VAT exemption regime.

3. Single VAT Registration
The Single VAT Registration (SVR) is a series of amendments aimed at minimising the instances in which non-established traders may be required to register for VAT in a Member State where they are not established. This will operate by:
• Expanding the One-Stop-Shop (“OSS”) from 1 January 2027;
• Introducing the reporting of movements of own goods between Member States to the OSS from 1 July 2028; and
• Extending domestic reverse charge provisions to cover all B2B supplies of services.

Conclusion
The most impactful element of the ViDA package is likely to be the introduction of mandatory e-invoicing and digital reporting for cross-border intra-EU transactions. But the wide ranging remit of ViDA means that businesses need to act now to consider their impact across invoicing processes, reporting procedures and the overall management of VAT within a business.

This article appeared in the November 2024 edition of the Irish Tax Monitor.