Electronic Invoice: European Digital Communication System for VAT Purposes

Digital communication for VAT purposes: what's new?

After almost three years of negotiations, the EU Council has reached an agreement on the so-called VIDA package, or VAT in the digital age, aimed at launching new measures that will adapt EU rules on value added tax to the digital age. This regulation will address electronic invoices and real-time data communication, as well as activities carried out via digital platforms, with the ultimate aim of combating VAT fraud and supporting businesses by promoting digitalisation.

The agreement reached by Ecofin on 5 November 2024 represents a truly epochal turning point for the VIDA system. It consists of three acts – a directive, a regulation and an implementing regulation – which together introduce changes to three different aspects of the VAT system.

In essence, the new rules:

• will make VAT communication obligations for cross-border transactions completely digital by 2030;
• require online platforms to pay VAT on short-term accommodation rental services and passenger transport services in most cases where individual service providers do not charge VAT;
• improve and expand online VAT one-stop shops so that businesses do not have to carry out costly VAT registrations in each Member State in which they operate.<...