EU Council Officially Adopts VAT in the Digital Age Package: What It Means for Businesses

March 13, 2025 ViDA

The Council of the European Union has officially approved the VAT in the Digital Age (ViDA) package as of yesterday, 12th March, 2025. This package is seen as a transformative reform aimed at modernizing VAT compliance across the EU. It will introduce mandatory e-invoicing, real-time digital reporting, changes to VAT obligations for digital platforms, and an expanded One-Stop Shop (OSS) to simplify cross-border VAT registration and reporting.

With implementation set to roll out between 2028 and 2030, businesses will need to prepare for a significant shift in VAT compliance, particularly in digital reporting and platform-based transactions.

The Key Measures that the ViDA Package will introduced are as follows;

1. Mandatory E-Invoicing and Digital Reporting

The ViDA package lays the foundation for a standardised e-invoicing system across the EU and real time digital reporting for intra-community transactions. From July 1, 2030, businesses conducting intra-community transactions B2B transactions will be required to issue and report invoices electronically.

2. VAT Obligations for Digital Platforms

New VAT rules will apply for digital platforms facilitating short-term accommodation rentals and passenger transport. Under ViDA, from July 1, 2028, platforms such as Airbnb and Uber will be considered deemed suppliers and will be liable for collecting and remitting VAT when the service provider does not.

3. One-Stop Shop (OSS) scheme

The One-Stop Shop (OSS), introduced in 2021 to simplify VAT compliance for businesses selling goods and services across the EU, is being expanded. From January 1, 2028, OSS will cover additional transactions, including:

  • B2C sales of goods with installation or assembly in another EU country.
  • B2C domestic sales of goods.

There will also be a new separate OSS introduced for businesses to report movements of their own goods between EU Member States. Currently, the movement of own goods between Member States, with certain limited exceptions, triggers a VAT reporting and registration obligation in both the country of dispatch and country of arrival of each movement. From 1 July 2028, a business may instead choose to report the intra-community movement of own goods in the OSS, thereby avoiding the need to register in the country of arrival to report the VAT on the acquisition.

4. Single VAT registration

Additionally, from July 1, 2028, a mandatory reverse charge mechanism will apply to transactions for non-established suppliers in the member state of taxation, shifting VAT liability to the customer.

5. Enhancements to the Import One-Stop Shop (IOSS)

ViDA also introduces changes to the Import One-Stop Shop (IOSS) framework. Currently, imports under €150 are exempt from customs duties, but this threshold is set to be removed as part of upcoming EU Customs Union reforms in 2028.

What’s Next?

Following the EU Council’s approval, the ViDA package will be formally published in the EU Official Journal. The directive, regulation and implementing regulation all enter into force on the twentieth day following their publication in the EU Official Journal. While the regulations are directly applicable, the directive will have to be transposed into national law.

 How Businesses Should Prepare

With these major VAT changes coming into force over the next five years, businesses should begin preparing by:

  • Investing in e-invoicing solutions to meet the new digital reporting requirements.
  • Understanding platform VAT obligations to ensure compliance with the deemed supplier rules.
  • Assessing OSS registration eligibility to benefit from simplified VAT reporting.Reviewing import VAT procedures to adapt to IOSS expansion.
  • Review import VAT procedures to align with the IOSS extension.

If you have any questions on the impact of the above changes on your business, please contact us.

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