European Council Adopts VAT in the Digital Age Package

On March 11, the European Council officially approved VAT in the Digital Age Package (ViDA) –a set of regulations designed to modernize the EU’s value-added tax (VAT) system for the digital era, which was first introduced on December 8, 2022.

The package aims to enhance EU competitiveness, tackle VAT fraud, and reduce the administrative burden for businesses.

Key Changes in the VAT System

The new package includes a directive, a regulation, and an implementing regulation, that introduce changes in three areas of the VAT system. The key measures include:

• Full digitalization of VAT reporting obligations for companies selling goods and services to businesses in other EU member states by 2030.
• A requirement for online platforms to pay VAT on short-term accommodation rentals and passenger transport services, in most cases where individual service providers do not charge VAT.
• Improvements to the online VAT one-stop shops, which will help businesses avoid costly VAT registrations in every member state in which they operate.

The Implementation of ViDA

The VAT in the Digital Age package will come into effect 20 days after its publication in the Official Journal of the EU. While the regulations are directly applicable, each member state will have to transpose the directive into national law.

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