VAT in the Digital Age

The VAT in the Digital Age (ViDA) package, also know as the ViDA package or ViDA reform, is a three-pillar reform originating from the European Commission's Tax Package; adopted on 15 July 2020, to establish a fair, efficient, and sustainable taxation system that ensures tax revenues for Member States of the EU. The ViDA package was formally adopted on 11 March 2025.

The ViDA package was proposed on 8 December 2022 by the European Commission as a measure to modernize the European Union's (EU) value-added tax (VAT) system. It was adopted following the Economic and Financial Affairs Council's (ECOFIN) agreement on the package on 5 November 2024, and subsequent consultation with the European Parliament, which approved the ViDA package in February 2025.

The purpose of the proposed and adopted reform was to reduce the VAT Gap in the EU, which, according to the European Commission VAT Gap Report 2023, contributed to a loss of €99 billion in VAT revenues among Member States in 2020.

The proposed package aimed to introduce a new real-time digital reporting system based on electronic invoicing (e-invoicing), update VAT rules for the platform economy, and establish a single VAT registration for businesses selling to consumers across the EU.

The adopted three-pillar ViDA package consists of:

  1. Council Directive (EU) 2025/516 of 11 March 2025 amending Directive 2006/112/EC as regards VAT rules for the digital age
  2. Council Regulation (EU) 2025/517 of 11 March 2025 amending Regulation (EU) No 904/2010 as regards the VAT administrative cooperation arrangements needed for the digital age; and
  3. Council Implementing Regulation (EU) 2025/518 of 11 March 2025 amending Implementing Regulation (EU) No 282/2011 as regards information requirements for certain VAT schemes.

The ViDA package was officially published in the Official Journal of the European Union under the L-series on 25 March 2025, and came into force on 12 April 2025. The Member States have different deadlines for each pillar to pass and implement appropriate legislation to meet the ViDA's requirements.

Before being officially adopted, it took nearly two years for the ECOFIN members to agree on the final text of the proposed introduction of the deemed supplier rule on the platform facilitating short-term accommodation rental and passenger transportation. The central point of disagreement on the final text was Estonia's opposition to the imposition of VAT collection responsibilities on platforms facilitating short-term accommodation rentals and passenger transport.

This article is issued from Wikipedia. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.