VAT in the Digital Age (VIDA) update

16 January 2024| CATEGORIES: Digital Reporting Requirements, e-invoicing, EU VAT, VIDA| TAGS: , , , ,

A year after the EU VAT in the Digital Age (VIDA) proposals were published (see our earlier blog article for further details), it seems increasingly likely that the introduction of the measures will be delayed.

Recent developments

On 8 December 2023, EU Finance Ministers met to discuss economic and finance matters, including the VIDA proposals. Since discussions on the proposals are ongoing, the draft directive was not put to a vote and the Spanish Presidency of the EU Council published a progress report. A recent vote in the EU Parliament had recommended that implementation of the proposals be delayed by one year.

Whilst there is widespread support for the proposals, Member States have not yet found a compromise upon which they can all agree. The new Belgium presidency recently published its programme of work which includes prioritising the VIDA proposals over the next six months.

The original timetable had intended the measures be approved by the end of 2023, with implementation in stages between 1 January 2025 to 1 January 2028.

Current status

The current status of the 3 pillars of the proposals are as follows:

  1. Pillar 1: Digital Reporting Requirements (DRRs) and e-invoicing
    This is likely to be delayed from 2028 to 2030 or later. The measure is intended to standardise the transactional information taxpayers submit to the tax authorities and require e-invoicing for cross-border intra-EU B2B transactions.
    The main sticking point concerns the proposed 2-day timeline for digital reporting and e-invoicing which is considered by many Member States to be unreasonably short and could potentially hinder intra-community trade.
    A 2028 implementation date is considered very ambitious by many Member States in view of the length of time needed to plan and develop the necessary systems and IT.
  2. Pillar 2: New deemed supplier rules for passenger transport and short-term accommodation platforms
    This is likely to be delayed from 2025 to 2026.
    Some Member States would prefer an optional application of the rules and there are ongoing discussions regarding reducing the proposed 45-day rental threshold.
  3. Pillar 3: Single VAT registration
    This is likely to be delayed from 2025 to 2026.
    Technical discussions are near completion. Some aspects of the original proposals have been dropped. The mandatory Import One Stop Shop for all imports is to be postponed until the 2028 EU Customs Reforms are introduced.

Businesses trading in the EU should continue to monitor developments on all the VIDA proposals.  Several Member States have already unilaterally introduced DRRs and others have announced plans to implement them in future. The VIDA measures are intended to result in the harmonisation of these disparate systems although it will be some time before this actually happens.

Digital reporting is an issue that will increasingly impact businesses that trade internationally as tax authorities around the world move to greater digitalisation.

RBCVAT provides practical, hands-on help and advice on all international VAT matters.

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