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.

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05/11/24

ViDA adoption at a glance

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09/10/24

Carbon Border Adjustment Mechanism: Important Updates for 2024

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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