ViDA and VAT modernisation

What is VAT in the Digital Age (ViDA)?

The ViDA initiative represents a significant overhaul of the European Union (EU) Value-Added Tax (VAT) system. These measures aim to modernise and streamline VAT processes across the EU. The European Commission first proposed ViDA in December 2022. This initiated an extensive consultation period which resulted in the EU Council formally approving the package on 11 March 2025.

The ViDA initiative covers three main areas, each addressing a key aspect of VAT modernisation.

eInvoicing and digital reporting

From April 2025, European Union (EU) countries can require businesses to use electronic invoices for transactions within their borders without needing EU approval. By July 2030, all EU businesses will be required to use a standard electronic invoice format for sales to:

• Governments
• and
• businesses in different EU countries.

This will also apply to domestic transactions where VAT digital reporting applies.

e-invoices for intra-Community transactions will need to issue within 10 days of providing goods or services. Businesses will then have to report the e-invoice information to the tax authorities immediately, instead of submitting periodic sales reports.

These changes will require businesses to update how they create invoices and report VAT, especially if they operate in numerous EU states.

Platform economy

From July 2028, online platforms will be treated as the actual service provider for VAT purposes if they facilitate the supply of:

• short-term accommodation
• or
• road passenger transport services.

This means that the platform, as a “deemed supplier”, will be responsible for charging and returning VAT on these supplies. If the service provider has a VAT number and provides this to the platform, the service provider is responsible for the VAT. Service providers include hosts and drivers.

This obligation is dependent on the VAT rules operating in the European Union (EU) country in which the service is provided. For example, passenger transport in Ireland is exempt from VAT.

Member States will have the option to delay the implementation of these changes until January 2030. They will also have the option to exclude small businesses eligible for the special scheme for small enterprises (SME scheme) from the deemed supplier provisions. Ireland is currently considering its position on these issues. 

Single VAT registration

The VAT One Stop Shop (OSS) system makes it easier for businesses to handle  VAT when selling to consumers in different European Union (EU) countries. Starting in January 2027, with further extensions from July 2028, the VAT OSS will be expanded to cover more types of sales including:

• electricity and natural gas
• supply and install contracts
• certain domestic supplies of goods and services.

Also, from July 2028, when businesses move their own goods between EU countries, they can report this through a new special OSS module. This will remove the need to register for VAT in each country.

These changes aim to make VAT administration simpler and more digital across the EU, especially for businesses operating in multiple countries.

Next: ViDA implementation timeline