EU Adopts Electronic VAT Exemption Certificate

The Council has approved new legislation introducing an electronic VAT exemption certificate, replacing the traditional paper-based system. The new certificate will become mandatory starting in June 2025, marking a significant step in modernizing VAT administration across the European Union.

Transition Period Until 2032

This reform is part of a broader legislative package amending the EU VAT Directive and VAT Implementing Regulation. The switch to digital certification is expected to enhance efficiency, reduce costs, and streamline VAT exemption management for businesses and tax authorities alike.

While the electronic certificate will be the new standard, Member States may continue using paper certificates or existing digital systems until 2032. To support a smooth transition, the European Commission will collaborate with national governments on technical implementation.

Key Legislative Milestones

• July 8, 2024 – Initial proposal by the European Commission
• November 13, 2024 – European Parliament opinion issued
• December 10, 2024 – Political agreement reached
• 2025 – Legislation takes effect 20 days after publication in the Official Journal of the EU

European Parliament Approves ViDA Proposal

On February 12, 2025, the European Parliament gave its approval to the VAT in the Digital Age (ViDA) proposal, marking a major step forward for digital tax reforms within the European Union. The proposal passed with strong support, receiving 589 votes in favor, 52 against, and 10 abstentions. The bill is now awaiting formal ratification by the European Council, which is expected to occur in March 2025.

Key Provisions of ViDA

The ViDA proposal introduces three main pillars designed to tackle VAT fraud and create more consistency in VAT handling across EU member states:

• E-invoicing and Real-Time Digital Reporting
• Single VAT Registration
• Updated Rules for the Platform Economy

One of the most significant changes is the move towards mandatory e-invoicing and digital reporting. Following ratification, Member States will have the ability to require e-invoicing for domestic transactions, bypassing the need for prior EU approval. Starting in 2030, e-invoicing will become obligatory for intra-community transactions, with full harmonization for member states with pre-existing continuous transaction control (CTC) models set for 2035.

There’s more you should know about global e-invoicing changes – learn more about the new and upcoming regulations.