ViDA Package approved by European Parliament
On 8 December 2022, the European Commission introduced the ‘VAT in the digital age’ (ViDA) package, comprising three proposals to modernise VAT rules for the digital era. These proposals include amendments to VAT Directive 2006/112/EC, the VAT administrative cooperation regulation (EU) No 904/2010, and the VAT implementing regulation (EU) No 282/2011.
The ViDA package aims to leverage technology to combat tax fraud and adapt VAT rules for digital business. Key changes include:
- A real-time digital reporting system based on e-invoicing.
- Updated VAT rules for the platform economy.
- A single VAT registration for businesses selling to consumers across the EU.
The European Parliament was consulted and provided its opinion on 22 November 2023. The Council agreed on the ViDA package on 5 November 2024 but decided to re-consult the Parliament due to significant differences in the proposals.
A major point of contention was the deemed supplier regime, that is treating the platform as the supplier for short term accommodation and passenger transport, which will be voluntary from 1 July 2028, and mandatory from 1 January 2030. The Council also allowed Member States flexibility in their invoicing systems and reintroduced summary invoices under certain conditions. The implementation deadlines were extended beyond the initial proposals to reduce the administrative burden on SMEs.
Key takeaway
After numerous months of debate, the ViDA package will finally be enacted, albeit not in its original form. Even though the deadlines initially planned have been largely extended and some flexibility has been introduced, businesses will have to get ready for the changes; from an operational perspective but also from a contractual one.
