ViDA Explained: How the EU's VAT in the Digital Age Package Affects Your Business

On 5 November 2024, the EU's Economic and Financial Affairs Council (ECOFIN) reached political agreement on the VAT in the Digital Age (ViDA) package — the most significant overhaul of EU VAT rules since the introduction of the One Stop Shop in 2021. The legislation was formally adopted on 11 March 2025 and published in the Official Journal on 25 March 2025. If you sell digital services, operate a platform, or trade cross-border within the EU, these changes will affect your compliance processes, your invoicing systems, and potentially your VAT registration obligations.

What is ViDA

ViDA is a legislative package that modernizes the EU's VAT framework across three pillars:

1. Digital Reporting Requirements (DRR) — Mandatory structured e-invoicing and real-time reporting for cross-border B2B transactions
2. Platform Economy — Expanding deemed-supplier rules so that digital platforms collecting payment for accommodation and transport services become liable for VAT
3. Single VAT Registration — Reducing the number of VAT registrations a business needs across the EU by expanding the One Stop Shop (OSS) and the reverse charge mechanism

Each pillar has its own implementation timeline, staggered from 2027 to 2035. The package aims to reduce the estimated EUR 128 billion annual VAT gap (the difference between expected and actual VAT revenue across the EU, per the European Commission's most recent report) while cutting compliance costs for businesses operating in multiple member states.

The implementation timeline

Pillar 1: Digital Reporting Requirements

Starting 1 July 2030, businesses making cross-border B2B supplies within the EU will be required to issue structured electronic invoices and transmit transaction-level data to their tax authority in near-real time.

What this means in practice

• Structured e-invoicing becomes mandatory for intra-Community B2B transactions. PDF invoices and paper invoices will no longer be acceptable for these supplies.
• Transaction data must be reported to the tax authority shortly after the invoice is issued. The exact reporting window is still being defined, but the direction is toward real-time or near-real-time transmission.
• A common EU standard for e-invoice format will replace the patchwork of national systems. The European standard EN 16931 is the likely basis.
• EC Sales Lists (ESLs) will be abolished once the DRR system is fully operational, as the same information will flow through the e-invoicing channel.

Why it matters for digital businesses

If you sell SaaS or digital services cross-border within the EU on a B2B basis (i.e., issuing reverse-charge invoices), you will need to issue those invoices in a structured electronic format and report them. Your invoicing system needs to support EN 16931 or whatever final standard the EU adopts. ERP integrations will need to generate compliant e-invoices, not just PDFs.

Pillar 2: Platform Economy

ViDA introduces deemed-supplier rules for platforms that facilitate certain types of transactions. When a platform is the deemed supplier, it becomes responsible for charging and remitting VAT — even though the underlying service is provided by someone else.

What's covered

• Short-term accommodation rental (stays up to 30 days, reduced from the original 45-day proposal). This covers platforms like Airbnb and Booking.com when the underlying host does not charge VAT.
• Passenger transport services. This covers ride-hailing platforms like Uber and Bolt when the underlying driver does not charge VAT.

How it works

If the underlying supplier (the host or driver) does not charge VAT on the supply, the platform is deemed to have received the supply from the host/driver (VAT-free) and made the supply to the end customer (with VAT). The platform must then charge, collect, and remit the VAT.

If the underlying supplier is VAT-registered and charges VAT, the platform is not the deemed supplier — the existing rules apply. This creates a critical dependency on whether the supplier communicates a valid VAT number to the platform.

Impact on SaaS companies

If your SaaS product is not a platform facilitating accommodation or transport, Pillar 2 does not directly affect you. However, if you build software for the hospitality or mobility sector, your customers (the platforms) will need VAT compliance features to handle the deemed-supplier obligations. This is a product opportunity for tax technology companies.

Pillar 3: Single VAT Registration

This is the pillar most likely to directly benefit digital businesses. ViDA expands the scope of the OSS and the reverse charge mechanism to reduce the number of VAT registrations a business needs across the EU.

Key changes (effective 1 July 2028)

• Expanded OSS scope: From January 2027, the OSS covers supplies of gas, electricity, heating, and cooling. From July 2028, it extends further to goods with installation or assembly. This means fewer scenarios where a direct local VAT registration is required.
• Expanded reverse charge: For B2B transactions where the supplier is not established in the member state of taxation, the reverse charge will apply more broadly. This reduces the need for suppliers to register in countries where they only make B2B supplies.
• Deemed-supplier OSS: Platforms acting as deemed suppliers (under Pillar 2) will be able to use the OSS to report and pay the VAT, rather than registering separately in each member state.

What about the call-off stock simplification

ViDA will abolish the call-off stock simplification (introduced by the 2020 Quick Fixes) once the Single VAT Registration pillar is fully effective. The rationale is that the expanded reverse charge makes the simplification unnecessary — if a non-established supplier can rely on the reverse charge for B2B supplies, there is no need for a separate call-off stock regime.

Countries already ahead of ViDA

Several EU member states have domestic e-invoicing or digital reporting mandates that predate ViDA. If you operate in these markets, you already have compliance obligations:

These domestic systems will eventually need to align with the EU-wide DRR standard by 1 January 2035. Until then, businesses face a fragmented landscape where each country has its own format, transmission method, and timeline.

What to do now

ViDA's staggered implementation means you have time, but not as much as the 2028-2035 dates suggest. Preparation should start now:

1. Audit your invoicing systems

Can your ERP or billing system generate structured e-invoices (EN 16931 or equivalent)? If you currently issue PDF invoices for EU B2B transactions, you will need to upgrade. Start evaluating e-invoicing solutions now, especially if you operate in Italy, Poland, Romania, France, or Germany where domestic mandates are already live.

2. Review your VAT registrations

The Single VAT Registration pillar may allow you to deregister in some member states where you only make B2B supplies or where the expanded OSS covers your B2C supplies. Map your current registrations against the ViDA rules to identify simplification opportunities from July 2028.

3. Assess platform exposure

If you operate or build software for a platform in the accommodation or transport sector, the deemed-supplier rules will require VAT collection capabilities. Start planning for this now — the optional early adoption date of July 2028 means some member states will implement these rules within two years.

4. Monitor domestic mandates

Don't focus only on the ViDA timeline. The bigger near-term risk is non-compliance with domestic e-invoicing rules in countries like Italy, Romania, Poland, and France. These are live or imminent, and penalties apply. Also watch for VAT rate changes that affect your calculations.

Frequently asked questions

What is ViDA (VAT in the Digital Age)?

ViDA is a comprehensive EU legislative package adopted in 2024 that reforms VAT administration across three pillars: digital reporting requirements (mandatory e-invoicing for cross-border B2B), platform economy rules (expanding deemed-supplier obligations), and single VAT registration (reducing the need for multiple registrations via expanded OSS).

When does ViDA take effect?

ViDA is implemented in phases: single VAT registration and expanded OSS from July 2028, deemed-supplier rules for platforms from July 2028, and mandatory cross-border B2B e-invoicing with digital reporting from July 2030. Full implementation extends to 2035.

Will ViDA require my business to use e-invoicing?

For intra-EU B2B transactions, yes — mandatory e-invoicing in EN 16931 format will be required from July 2030. Domestic mandates vary by member state and many are already live or imminent.

How does ViDA affect platforms like Airbnb or Uber?

From July 2028, platforms facilitating short-term accommodation rentals (up to 30 days) and passenger transport will become deemed suppliers for VAT purposes. The platform must charge and remit VAT, not the underlying service provider, unless the provider proves they are already accounting for VAT.