The future of VAT: Digital reporting and e-invoicing in the EU

May 05, 2025

The VAT in the Digital Age (ViDA) package was adopted on 11 March 2025 and will be implemented progressively until January 2035. By July 2030, digital reporting and e-invoicing on intra-Community transactions in goods and services will be introduced.

ViDA

ViDA is an initiative by the European Commission aimed at modernising and digitalising the Value Added Tax (VAT) system within the European Union. Its primary objectives are to enhance tax collection, reduce fraud, and simplify VAT compliance for businesses and tax administrations through the use of technology.

The ViDA project is built on three fundamental pillars designed to adapt the VAT system to the challenges of the digital economy and improve its efficiency on a European level:

1. Digital Reporting Requirements (DRR) and e-invoicing

This pillar focuses on implementing e-invoicing and establishing digital reporting systems to facilitate the exchange of tax information between EU countries. The goal is to standardise e-invoicing processes across all EU Member States, promote greater transparency, efficiency, reduce tax fraud and replace the requirement of issuing invoices in paper format.

Key implementation dates for e-invoicing and DRR:

In 2025:

EU Member States may introduce mandatory e-invoicing for domestic B2B and B2C transactions.
Prior authorisation from the European Commission will no longer be required for this measure to be implemented, provided the measure applies only to taxpayers established within the respective territory.

From 1 July 2030:

E-invoicing will become mandatory for intra-EU B2B transactions and those subject to the reverse charge mechanism.

National e-invoicing systems (excluding those established before 2024) will be harmonised with EU standards.

VAT-registered businesses must issue structured e-invoices in a standard EU format.

Invoices must be issued within 10 days of the supply of goods or services, or upon payment if made earlier. For payments on account, an e-invoice must be issued within 10 days of receipt of the payment. Self-billing will attract a deadline of 5 days from the date of the supply. These requirements do not apply to any EU Member State’s reporting regimes on domestic supplies.

Holding an e-invoice for eligible transactions will become a substantive condition for VAT deduction or reclaim, as per the revised proposals.

From 1 January 2035:

National e-invoicing systems established before 2024 must be fully harmonised with EU standards.

2. Platform economy

This pillar seeks to address the VAT challenges related to the platform economy, particularly short-term accommodation rentals and passenger transport services. It aims to enhance the role of digital platforms in VAT collection.

Key implementation dates for the platform economy:

Starting 1 January 2030 (or optionally from 1 July 2028):

The "deemed supplier" rule will be introduced.

This rule will impact digital platforms, such as those offering passenger transport or short-term accommodation rentals, who will be responsible for collecting and remitting VAT on behalf of providers who do not handle it themselves.

These platforms will collect VAT directly from customers and remit it to tax authorities.

3. Single VAT registration (SVR)

The third pillar proposes creating a single VAT registration system, enabling businesses to manage their tax obligations throughout the EU with one registration. This simplifies tax administration for businesses operating in multiple countries, reducing bureaucracy and compliance costs associated with navigating different tax regulations.

Key implementation dates for SVR:

Starting 1 July 2028:

EU Member States will implement a reverse charge mechanism for non-established suppliers.

New rules will expand the scope of the One-Stop Shop system to include:

B2C sales of products like electricity or gas within an EU Member State.
Stock movements within the EU intended for direct sales to consumers at a later stage.

Next steps

With ViDA regulations becoming effective in the near future, e-invoicing will be required for cross-border intra-community B2B supplies. EU Member States may also mandate e-invoicing for domestic B2B and B2C transactions earlier than the deadline established by the Directive. Adopting an e-invoicing strategy is essential for compliance and efficiency in your business.

Businesses should prepare for e-invoicing by setting a strategy, understanding technical requirements, ensuring data quality, and considering process impacts. Proactively addressing these areas helps meet regulations and enhances operational efficiency in financial transactions. PwC is well placed to assist you and your business in this journey.

6 results

3 Min Read 09/04/25

Changes in turnover calculation: Impact beyond small undertakings

Recent amendments to the Value Added Tax Act, effective from 1 January 2025, primarily impact small undertakings by altering the criteria for eligibility. The changes include the inclusion of certain exempt supplies related to immovable property, financial transactions, and insurance transactions in the turnover calculation. Examples illustrate how these changes affect the eligibility of taxable persons for the small undertakings exemption. Broader implications include the potential impact on large enterprises and third parties transacting with entities that no longer qualify for the exemption. The legal amendments focus on small undertakings, but the impact may be wider, introducing new responsibilities for large enterprises as well.

3 Min Read 31/01/25

A detailed analysis of the changes to the SME scheme

Delve into the detailed changes to the SME scheme effective from 1 January 2025, in line with updates to the EU Council Directive 2006/112/EC. The new special scheme for small enterprises allows taxable persons established in an EU Member State to exempt their cross-border supplies from VAT. The amendments to the Value Added Tax Act (VATA) are divided into two articles: Article 11A, applicable to taxable persons established in Malta, and Article 11B, applicable to those established outside of Malta. The article outlines the registration process, eligibility criteria, and reporting requirements for small enterprises under the new scheme.

5 Min Read 16/01/25

Updates to VAT legislation effective 1 January

Local VAT legislation has been updated effective from 1 January 2025, incorporating Council Directive (EU) 2020/285. Small enterprises with an annual turnover of up to €100,000 in the EU are eligible for VAT exemption. Amendments to Articles 10 and 11 of the Maltese VAT Act update registration provisions and thresholds. Virtual service supply rules have changed, and cash accounting is now applicable to certain professional services. Other updates include electronic registration processes and VAT exemptions for specific health-related items.

05/11/24

ViDA adoption at a glance

At the Economic and Financial Affairs Council (ECOFIN) meeting on 5 November 2024, an agreement was reached for the adoption of the VAT in the Digital Age (ViDA) Directive. Key dates include the voluntary implementation of the platform economy and single VAT registration by 1 July 2028, mandatory adoption of deemed supply rules for the platform economy by 1 January 2030, and mandatory adoption of Digital Reporting Requirements (DRR) and e-invoicing for cross-border B2B supplies by 1 July 2030. Harmonisation of national e-invoicing with EU standards is set for 1 January 2035. The directive aims to streamline VAT processes, enhance digital reporting, and ensure consistency across Member States.

09/10/24

Carbon Border Adjustment Mechanism: Important Updates for 2024

The CBAM phased implementation keeps progressing and starting Q3 2024, default values may only be used for up to 20% of emissions regarding complex goods, while non-complex goods must report actual values. The Q3 report deadline is 31 October 2024, with modifications allowed until 30 November. From 2025, only authorized declarants can submit reports.

17/09/24

Refund of VAT incurred in an EU Member State where the taxable person is not established

The 8th Directive allows businesses to reclaim VAT incurred in EU Member States where they aren’t established. Maltese businesses must be VAT-registered, not have an EU presence, and apply by 30 September 2024. Applications are submitted via the MTCA portal, with appeals handled by the Member State of refund.

Contact us

David Ferry

Tax Partner, PwC Malta

Tel: +356 2564 6712

Mirko Gulic

Senior Manager, Tax, PwC Malta

Tel: +356 7973 9041

Anna Herrera