VAT in the Digital Age (or ViDA) is a large packet of VAT reforms being implemented by the EU. As you’ve probably noticed, tax rules and infrastructure don’t develop as fast as technology. Before the 2021 EU VAT reforms, much of Europe was working with laws written before ecommerce even existed. With that in mind, ViDA aims to update the EU’s VAT system, to make it fairer, easier to use and harder to defraud.
VAT in the Digital Age was built around three pillars:
Each reform or piece of legislation in the package falls under one of the pillars.
One of the ways the EU seeks to make VAT easier for businesses to manage is the introduction of e-invoicing. E-invoices (electronic invoices) are digital invoices that use a structured data format so they’re machine-readable.
The aim is that through e-invoicing, compliance is cheaper and easier for businesses. Plus, Member States will have access to real-time information they can use to combat VAT fraud. The EU Commission believes that this switch will save both businesses and governments billions of euros a year.
In the immediate, you need to look into implementing an e-invoicing system in your business. ViDA’s mandate doesn’t come into effect until July 2030. However, as long as they hit the EU-wide deadlines, Member States are free to implement e-invoicing at their own pace. As a result, depending on where your customers are, you might need to act sooner than later.
There are three big positives to the Digital Reporting Requirements:
In 2021, the EU made some major changes to the way that VAT worked. One of (if not the) most impactful changes was the introduction of Deemed Supplier rules. This is the ruleset that made marketplaces like Amazon responsible for handling the VAT on certain sales on their platforms. It made it easier for non-EU sellers to trade in the single market and involved marketplaces in the effort to fight VAT fraud.
VAT in the Digital Age will extend the Deemed Supplier Rules to include two new markets:
As with marketplaces, if a user (the underlying supplier) registers for VAT, the responsibility to report and remit VAT shifts back to them.
Notably, ViDA updates the marketplace rules so that starting January 2027, they will also be the Deemed Supplier for certain B2B transactions. It does this by amending Article 14a of Directive 2006/112/EC to include “taxable persons” (businesses).
In January 2025 the EU updated it’s SME Scheme to further help small EU businesses trade across the single market. The scheme lifts some VAT obligations for businesses with an annual turnover of less than ERU 100,000.
Under the SME scheme, EU Member States have the option to exempt small businesses from the Deemed Supplier rules introduced by ViDA.
Whilst the majority of the Deemed Supplier expansion implemented by ViDA doesn’t affect ecommerce, the B2B changes might impact you. You’ll be affected if all of the following apply to you:
If you meet all those criteria, you’ll need to take a look at your current VAT reporting process. Some of your sales might move off your VAT returns and onto that of the marketplace and you’ll need to know which moving forward. Getting it right will mean avoiding the VAT getting reported twice.
Alongside the Deemed Supplier rules, 2021 saw the introduction of the One Stop Shop schemes. If you’re not familiar, they’re three sister schemes:
This is an over-simplification, but each scheme covers specific kinds of transactions for the whole single market. They were a first step towards a single VAT registration, moving us away from requiring registrations in every Member State.
It’s fair to say that the One Stop Shop schemes have been successful. ViDA seeks to clarify some of the original rules and expand upon them, getting us even closer to the single VAT registration.
All three One Stop Shop schemes are being changed by VAT in the Digital Age. Union OSS is being expanded. If you hold stock in an EU country (where you're not established) you'll be able to report certain domestic supplies of those goods on your Union OSS return. You'll also be able to report intra-community transactions (moving your inventory between EU states, for example) via OSS.
Non-Union OSS is being expanded to cover all services, not just Telecommunication, Broadcasting and Electronically supplied (TBE) services.
IOSS shipments are getting unique consignment numbers which will be linked to your IOSS number. The goal is preventing number sharing (or theft!) and customs fraud.
Call-off stock is a kind of tax arrangement for B2B transactions. Essentially, it allows you to move a portion of your inventory from one EU country to another, without requiring you to register for VAT in the second country. The catch is that those goods have to be for one, pre-determined customer. They can then access the goods (call them off) when they need them, at which point the VAT would need to be reported. You may be familiar with it if you had ever used Amazon’s Call-off Stock Program.
VAT in the Digital Age is getting rid of call-off stock for three main reasons:
At the end of June 2028 new call-off stock arrangements won’t be allowed. From then, you’ll have 12 months to either sell the goods or transfer them back to your ownership.
If you sell B2B you’ll be familiar with the domestic reverse charge mechanism. What you might not know is that it’s currently an optional rule that EU Member States can choose to use. VAT in the Digital Age makes it mandatory. There will still be some sales that won’t be eligible for reverse charge, like those under the Margin Scheme.
ViDA also creates a new rule that expands on domestic reverse charge. The extension of is an optional rule – EU States can decide whether they want to implement it or not. It would allow businesses to use the mechanism in a country where they’re not based. For example, a Spanish company buys stock in Germany and immediately sells it on to another German business. The Spanish company isn’t VAT-registered or established in Germany. The Spanish company uses domestic reverse charge on the sale to the German business.
ViDA has a lot of components and implementing them at the scale of the EU takes a lot of work. Some has already begun – e-invoicing mandates are already being enacted across the EU. Each major piece has a deadline, taking us all the way through to 2035:
One Stop Shop will include B2C supplies in the e-charging sector. Some of the clarifications regarding OSS and IOSS come into effect.
The expansion of Deemed Supplier rules comes into effect, though Member States can opt to delay implementation until January 2030. Platforms in the passenger transport by road and short-term accommodation rental sectors will have to handle the VAT for their users.
The main components of the Single VAT Registration pillar also go live, including the expansion of OSS and mandatory domestic reverse charge.
Digital Reporting Requirements come into effect. Cross-border B2B transactions will have to be reported using e-invoicing.
Any national-level real-time reporting systems must be aligned with the EU-wide cross-border digital reporting system.
