After much deliberation, agreement has been reached on each of the three pillars of the VAT in the Digital Age (“ViDA”) proposals. 

Initially proposed by the EU Commission in December 2022, with an initial introductory date as early as 1 January 2025 for some pillars, a number of delays and extensions to the introduction date were required before political agreement was reached on 5 November 2024.     

The overall aim of ViDA is to close the gap on VAT fraud and non-compliance across the EU and will result in fundamental changes to the operation of VAT within the EU. In essence the aim of the ViDA proposals is to make the EU VAT system more business-friendly and more resilient to fraud. 

Pillar 1: e-invoicing and digital reporting

Mandatory introduction date: 1 July 2030

• EU VAT registered businesses will be required to issue an e-invoice in respect of EU Business to Business (“B2B”) or Business to Government (“B2G”) supplies of goods and/or services. 
• This invoice, which is required to be issued in an EU wide structured format (EN16931), should be issued within 10 days of the date of supply or the date of payment, whichever date is the earliest.
• In addition to this, information pertaining to the supply/invoice will need to be reported to the relevant tax authority on a real time basis.
• The reporting of this information on a near real time basis, will allow for improved communication between EU tax authorities and help combat VAT fraud and non-compliance.  
• Member States are free to introduce e-invoicing and digital reporting in their respective Member State earlier than the 1 July 2030 introduction date and we have seen such introductions in some Member States to date, with others due to follow in the immediate future.
• While Irish Revenue have indicated their intention to introduce e-invoicing and digital reporting, no date has been set yet as to when this may be. 

Pillar 2: platform economy

Mandatory introduction date: 1 January 2030 (but voluntary from 1 July 2028)

• Under Pillar 2, online platforms operating in the short-term rental accommodation (a rental service with a similar function to the hotel sector, which is uninterrupted, provided to the same person and for a maximum of 30 nights) and passenger transport (by road) sectors will become the deemed supplier of such services. 
• As such, it will be the platform operator who will become responsible for accounting for any VAT arising on such supplies, in cases where the underlying service provider currently does not account for VAT (e.g. as it may not have breached the VAT registration threshold).
• Certain circumstances may arise whereby the platform operator should not be required to account for output VAT on relevant supplies: 
  • Where the underlying supplier declares to the platform operator, and provides its EU VAT number of the Member State in which the VAT is chargeable, that it intends to account for VAT on the supply. 
  • Where the underlying supplier qualifies and opts for the SME VAT regime.

Pillar 3: single EU VAT registration

Mandatory introduction date: 1 July 2028

• The introduction of a single, EU wide VAT registration should help reduce the VAT registration requirements and compliance costs for businesses in Member States where they do not have an establishment.
• The scope of the existing One Stop Shop (“OSS”) regime will be extended to include:
  • Other EU B2C supplies and certain domestic supplies. 
  • Cross-border movements of own goods.
• Some, but not all, EU Member States provide for domestic reverse charge rules whereby a non-established business may avoid a local VAT registration in certain circumstances, in particular around goods and services in connection with immoveable property. Proposals under ViDA will introduce mandatory domestic reverse charge rules across all Member States.   

Next steps

While July 2028 may seem like some time away, businesses should start to consider how the above proposals will impact their business. Systems and invoicing procedures will need to be tailored in order to become compliant with the proposed changes. Given the various stakeholder involvement and potential updates required to systems, this can be a timely process, and it is important to ensure reporting obligations can be met.

For businesses engaged in cross-border supplies, consideration should be given to what obligations you may have in other EU Member States, in particular where Member States introduce proposals in advance of the mandatory introduction date. 

Should you have any queries on the VAT in the Digital Age proposals or the implications for your business, please contact Barry McNamara or Áine Casey.