The EU’s implementation strategy for VAT in the Digital Age

Publication
3 minute read
25 Nov 2025

The European Commission has officially published its Implementation Strategy for VAT in the Digital Age (ViDA), outlining a roadmap for one of the most significant VAT reforms in decades. This strategy aims to modernise VAT systems, strengthen fraud prevention, and simplify compliance for businesses operating across the EU.

The digital economy has transformed how businesses trade and interact, and VAT systems need to keep pace. ViDA addresses these challenges by introducing:

Digital transformation: VAT reporting will shift to real-time systems and mandatory e-invoicing.
Simplified compliance: A Single VAT Registration (SVR) will reduce administrative burdens for cross-border operations.
Platform economy regulation: Digital platforms will assume VAT obligations for certain services, ensuring fair competition and closing loopholes.

Combat VAT fraud: Real-time reporting and e-invoicing will help reduce carousel fraud and improve transparency.
Enhance efficiency: Harmonised digital reporting standards will streamline processes across member states.
Level the playing field: Platforms facilitating short-term accommodation and passenger transport will be treated as deemed suppliers for VAT purposes.

2025–2027: Legislative clarifications and IT infrastructure development.
2028: Platform economy rules take effect, targeting accommodation and transport services.
2030: Mandatory e-invoicing and real-time reporting for intra-EU B2B transactions.
2035: Full harmonisation of domestic digital reporting systems with EU standards.

A major highlight of the ViDA strategy is the introduction of real-time digital reporting for cross-border trade, based on e-invoicing, which will become the default method for invoicing. This shift will:

Enable tax authorities to monitor transactions almost instantly.
Reduce fraud risks by eliminating delays in reporting.
Create a uniform approach across Member States, improving interoperability and reducing compliance complexity.

The Commission plans to publish additional guidance and technical specifications to support:

Digital Reporting Requirements (DRR): Standards for e-invoicing and interoperability.
Platform economy rules: Compliance guidelines for digital platforms.
SVR expansion: Operational details for businesses using OSS and IOSS schemes.

Economic benefits: Estimated savings of €51 billion for businesses and €172–214 billion in overall economic gains over the next decade.

Fraud reduction: Up to €11 billion annually through improved reporting and monitoring.
Operational efficiency: Lower compliance costs and enhanced interoperability of VAT systems

What steps can businesses take now?

Although the ViDA reforms will be rolled out gradually, businesses are encouraged to ensure their systems are compliant with ViDA earlier than the deadlines highlighted above to ensure a smooth transition and full compliance once the changes come into effect. The scope of ViDA makes particular emphasis on e-invoicing and digital reporting requirements, which may pose operational challenges for many businesses.

Several Member States have already implemented or announced plans to introduce mandatory e-invoicing. As such, businesses should:

Assess their geographical footprint to identify where e-compliance obligations are already in place or expected soon.
Review existing IT infrastructure, particularly invoicing systems, to determine whether upgrades or integrations will be needed to meet the new standards.
Evaluate platform obligations: Businesses operating as digital platforms, especially those facilitating short-term accommodation or passenger transport, should understand how the new VAT obligations will affect their business models. This includes identifying changes required in operational or financial processes.

How can we help?

We can support your business in navigating these changes by:

Conducting a ViDA impact assessment: Evaluating how the introduction of ViDA will affect your operations, compliance processes, and financial systems.
Reviewing current software solutions: Analysing your existing ERP and invoicing systems to identify gaps in meeting e-invoicing and real-time reporting requirements.
Providing upgrade and integration support: Assisting businesses in evaluating and enhancing their existing systems or implementing suitable solutions to meet ViDA compliance requirements.

Our goal is to help you transition smoothly, minimise disruption, and leverage the benefits of digital VAT compliance.

Bottom Line: ViDA is not just a tax reform—it’s a digital leap forward. The phased implementation gives businesses time to adapt, but proactive planning is essential to stay ahead.

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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

Senior Manager, Tax, PwC Malta

Tel: +356 7973 9056

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