ViDA: revolutionising EU VAT for the Digital Era

ViDA is an EU legislative package aimed at modernising and improving the EU's Value-Added Tax (VAT) system to make it more effective for businesses, increase transparency, reduce VAT fraud – especially in intra-EU trade, and address challenges posed by the evolving digital economy and platform businesses. The provisions of the legislative package will be rolled out progressively until January 2035.

In this blog post, we’ll focus on digital reporting and e-invoicing in particular.

The DRR element introduces near real-time digital reporting on a transaction-by-transaction basis for intra-EU B2B transactions, using mandatory, structured e-invoicing to combat VAT fraud (such as carousel fraud) and streamline compliance. The system follows a post-audit model, meaning that invoices flow directly from supplier to buyer without requiring prior tax authority clearance. The move to e-invoicing is expected to reduce VAT fraud by up to €11 billion a year and bring down administrative and compliance costs for EU traders by about €4.1 billion per year over the next ten years. Structured e-invoices must conform to the European standard EN 16931, which becomes mandatory for cross-border B2B transactions from 1 July 2030. Suppliers must issue e-invoices within 10 days of the chargeable event and report the data to their national tax authority at the time of issuance. Member States may require customers to report their received e-invoices within 5 days of receipt, though they can opt out of this requirement. Transaction data will be shared through a new Central VIES platform, which will replace the current VIES system and EC Sales Lists (recapitulative statements), enabling automated cross-checking of sales and purchase data across Member States.

The main objectives of ViDA include: 

• Modernising and streamlining VAT compliance
  ViDA seeks to digitise VAT reporting obligations and simplify VAT procedures for businesses, especially those engaged in intra-EU cross-border trade. This includes mandatory e-invoicing and near real-time digital reporting to improve transparency and reduce administrative burdens on businesses.
• Reducing VAT fraud and revenue losses
  The initiative addresses significant VAT revenue losses caused by fraudulent activities such as carousel fraud. By introducing transaction-level near real-time data exchange, harmonised e-invoicing standards, and improved digital cooperation among tax authorities, ViDA aims to recover billions in lost VAT revenues and close the VAT Gap.
• Harmonising VAT processes and e-invoicing standards across the EU
  ViDA establishes EU-wide standards for electronic invoicing based on EN16931 , requiring structured machine-readable formats and digital reporting to facilitate interoperability, consistency, and data sharing among Member States. This harmonisation is crucial for efficient tax administration in a cross-border context.

Digital reporting and e-invoicing pillar:

• Since 14 April 2025 (entry into force): Member States may mandate domestic e-invoicing without requiring a derogation from the EU; customer consent for e-invoices is no longer required.
  • Mandatory from 1 July 2030 for structured e-invoicing and digital reporting for intra-Community B2B transactions.
  • Member States that introduced domestic digital reporting systems after 1 January 2024 must harmonise with the EU standard by 1 July 2030.
• Member States with existing domestic real-time reporting systems before 1 January 2024 have until 1 January 2035 to adapt their systems to the EU standard

At PwC, we're here to guide you through the intricate changes brought by the VAT in the Digital Age (ViDA) framework, especially concerning DRR and e-invoicing. We offer robust compliance support and strategic advice to help you handle these shifts. Our team works with you to evaluate how ViDA affects your operations, set up compliant e-invoicing and digital reporting systems, and refine VAT processes across EU Member States. With our global network of tax professionals, we deliver custom training, tech solutions, and regular updates on regulations. This ensures you're ready for the phased ViDA rollout, reduce risks, and seize opportunities for simplified VAT management in the digital economy.