The European Union has officially adopted Directive (EU) 2025/516, in March 2025, as part of the VAT in the Digital Age (ViDA) Package, and with it, it has introduced a transformative overhaul of the VAT system. With digital reporting, platform VAT obligations, and simplified VAT registration as its primary goals, the directive aims to modernize how VAT is applied and collected across the EU.
The most important novelties regulated by the Directive include:
- E-Invoicing & Digital Reporting
From 1 July 2030, businesses engaged in cross-border B2B transactions within the European Union will be required to issue structured electronic invoices and report them in real-time to national tax authorities. Having this in mind, Member States may implement national e-invoicing regimes without prior EU approval, starting from April 2025
- Platform Economy Rules
Digital-based platforms that provide short-term accommodation services, as well as passenger transportation services, will become “deemed suppliers”, meaning these platforms will become responsible for collecting VAT. This requirement is optional from 1 July 2028 and mandatory across the EU from 1 January 2030.
- Expansion of the One Stop Shop (OSS)
The OSS system, which allows businesses to manage VAT obligations in multiple EU countries through a single registration, is being extended to cover additional B2C services and intra-EU stock transfers. These changes take effect from 1 January 2027.
The rules stated in the Directive are to be implemented gradually until the year 2035, which is determined as the deadline for the full harmonization of domestic e-invoicing standards with the Directive.
Prepared by,
Daniel Vujacic, LL.M. (UW)