ViDA: mandatory e-invoicing and e-reporting

On 11 March 2025, the EU Council granted its final approval to the VAT in a Digital Age ("ViDA") package, following a re-consultation with the European Parliament. This landmark decision will introduce substantial changes to the EU VAT system, effective from 1 January 2027.

The ViDA package represents a comprehensive reform designed to modernise and streamline the Value Added Tax (VAT) system within the European Union (EU). It will apply to all businesses that sell goods or services within the EU, regardless of whether they are established in an EU Member State.

To recap, the three main pillars of ViDA are:

Pillar 1: E-Invoicing and Digital Reporting Requirements (DRR)
Introduce Digital Reporting Requirements (DRR), modernise the process of invoicing, and move to mandatory e-invoicing on intra-EU business-to-business (B2B) transactions (from 1 July 2030).

Pillar 2: Deemed-Supplier Rule for Platform Companies
Introduce a deemed-supplier rule for platforms that facilitate short-term accommodation rentals and passenger transport services by road (from 1 July 2028 or 2030).

Pillar 3: Single VAT Registration and Reverse Charge
Reduce the need for multiple VAT registrations through an expansion of the One-Stop Shop (OSS), the introduction of a specific scheme for the transfer of own goods, and a mandatory application of the reverse charge mechanism (from 1 July 2027 for the supply of electricity and 1 July 2028 for further extension of the OSS schemes and mandatory reverse charge mechanism).

Why is Pillar 1 important for the digitalisation of the indirect tax system?

The introduction of e-invoicing and DRR represents an important step towards the accurate and timely collection of VAT and enhances data (tax, logistics, finance, legal) sharing between the tax authorities of the Member States. The primary objectives of this initiative are to combat VAT fraud, improve compliance, and enable the real-time detection of discrepancies between the reports submitted by suppliers and purchasers of goods and services.

Failure to submit the data electronically to the tax authorities in a timely manner or having mismatches might result in negative financial consequences, such as penalties, as well as business implications, jeopardising relationships with key business partners.

In addition to ViDA, countries worldwide are already introducing local mandates, imposing B2B, B2G, and B2C electronic invoicing and electronic reporting obligations as mandatory legal requirements. The increasing number of countries and legal requirements is raising attention for businesses globally, searching for the right approach, finding the best solution, and approaching this topic strategically.

How can we support?

Together with a diverse network team of legal and technology PwC experts, we are providing end-to-end e-compliance support globally. Some of the main deliverables are captured as:

Project Management

Strategic sparring partner
Cross-functional awareness sessions
Governance model including RACI
Support building internal business case
Coordination role for all country implementations (main/single point of contact)

Legal

In-depth legal e-compliance requirements assessment
Continuous monitoring of rules and regulations (Global Electronic Compliance radar)
Translation of local legal requirements into technical requirements
Local requirement validation checks

Data

Vendor selection support (RFI, RFP, analysis)
IT impact assessment (understanding the ERP landscape for e-compliance)
Analysis of master and transactional data (data gap assessment)
Data mapping

Technology

ERP customisation
E-compliance software implementation
Middleware development
Support during testing

By comprehending the forthcoming changes and preparing accordingly, businesses can ensure they act compliantly, mitigate potential risks, and avoid business disruptions.

PwC has extensive experience in all the aforementioned areas and has supported numerous clients. We are committed to guiding you through every phase of this transition. Our services include clear impact assessments based on your business data, comprehensive legal assessments of both current and future obligations, strategic roadmaps to navigate the transition effectively, data analysis, and technology implementation.

Our SMEs are excited to get in touch with you and share their best practice experience.