ViDA Package Approved: A Triumph for VAT Modernization in the EU

The European Council has officially adopted the VAT in the Digital Age (ViDA) package, marking a significant milestone in modernizing VAT systems across the European Union. This comprehensive initiative, which began in 2022, has overcome numerous political and legal challenges, culminating in a unanimous vote at the recent ECOFIN meeting on 11 March 2025.

Key changes and implications

The ViDA package will take effect 20 days after its publication in the Official Journal of the EU, though some provisions have a delayed implementation timeline. Pillar 1 of the ViDA package introduces several pivotal changes aimed at streamlining and harmonizing VAT processes across the EU:

The announcement also included a revision to the mandate timelines for entrepreneur businesses:

• E-Invoicing as the Default: By 1 July 2030, e-invoicing will become the default method for issuing invoices in the EU. However, Member States may authorize alternative invoicing methods for domestic transactions.
• Digital Reporting Requirements (DRR): Recapitulative statements for cross-border supplies will be replaced by DRR, requiring real-time reporting. If Member States adopt real-time reporting for domestic transactions, it must align with cross-border DRR standards.
• Convergence of National Systems: Existing national VAT reporting systems must align with the EU model by 1 January 2035.

Background and insights

The journey to ViDA’s adoption was complex. Initially proposed by the European Commission in December 2022, the package faced various setbacks, including a public rejection in June 2024. However, the persistent efforts of policymakers and stakeholders resulted in a directive that enhances VAT efficiency and transparency across the EU.

Looking ahead

As the ViDA package takes effect, businesses must prepare for the upcoming changes. This includes updating their e-invoicing systems to comply with the new standards and ensuring financial processes align with the Digital Reporting Requirements. At Basware, we are committed to supporting our customers through this transition by providing the tools and expertise needed to succeed in the digital age.

First insights on practical implications

One significant change is the removal of the Buyer Acceptance Requirement, which may create challenges for invoice recipients, as seen in Germany. Businesses must communicate effectively with their vendors to avoid discrepancies, especially with multiple official invoice formats in use. Proper coordination is also essential for archiving to prevent compliance risks.

Key dates to remember

• July 2028: Following the 1 July 2021 introduction of the One Stop-Shop (OSS), its scope will be extended to cover the movement of own stocks before cross-border B2C transactions to reduce the foreign, non-resident VAT registrations and returns. Additionally, the call-off stock burden will be eliminated.
• January 2030: Travel and accommodation sharing platforms will become deemed suppliers, making them liable for users' VAT. New definitions for providers, users, and platforms will help prevent double taxation or no-taxation (voluntary adoption from July 2028).
• July 2030 - 2035: Mandatory digital reporting of intra-community transactions will be introduced, along with the requirement to issue and receive intra-community e-invoices. Member States may impose their own e-invoicing or real-time reporting rules but must comply with the EU e-invoice standard EN 16931.

Basware's perspective

The ViDA package represents a significant step forward in VAT modernization. By embracing digitalization and harmonization, the EU is creating a more efficient and transparent VAT system that benefits businesses and consumers alike.

At Basware, we view the adoption of the ViDA package as a positive development for the industry. As the leader in e-invoicing and financial automation, we are well-positioned to help businesses navigate these changes and maximize the benefits of digital reporting. Our solutions ensure compliance with evolving regulations while enhancing efficiency and accuracy in financial processes.

For more information, see the official EU press release: European Council Press Release.

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