VAT in the Digital Age:
What changes for your business?
The European Commission intends to modernise the European Union's outdated VAT system with VAT in the Digital Age (ViDA). The proposed changes represent a significant shift for businesses active in the digital economy, e-commerce and the platform economy. These economies have grown substantially in recent years, necessitating an evolution of the VAT system to keep pace.
With a number of new rules surrounding digital reporting, e-invoicing and VAT obligations, the EU is attempting to tackle VAT fraud, reduce administrative burdens and create a fairer playing field for all member states.
In this article, we’ll give you a clear overview of what ViDA entails, why it’s important, and how your business and you as an entrepreneur can best prepare for these new VAT rules in the digital age.
Recap: how does the VAT system currently work?
First, a brief reminder of how the VAT system works today.
The current VAT system in the European Union is very complex and fragmented. Due to differences between different EU countries, companies often need to have multiple VAT registrations to conduct cross-border business.
Furthermore, VAT returns and invoices are managed in a variety of ways, which can lead to errors, delays, and in the worst-case scenario, VAT fraud. Therefore, the system no longer aligns with the reality of e-commerce, digitalisation, and increased mobility of products and services.
These issues have led to the European Commission's original proposal to reform the system through VAT in the Digital Age.
Introduction to the new VAT rules
The new VAT rules are part of a broader vision to modernise the European VAT system and align it with the current economy. Central to this is the shift towards digital processes that are better suited to the digital age and the cross-border nature of goods and services.
The aim is to:
Introduction of digital reporting obligations for intra-EU transactions;
Mandating e-invoicing and e-billing for cross-border supplies;
New rules for the platform economy to be introduced;
To harmonise the system and better align it with the needs of various stakeholders.
These measures will affect small and large businesses alike.
Would you like to know what effect this will have on your business? Please feel free to get in touch and we'll be happy to help.
De ViDA-regeling staat voor de btw-regeling voor de digitale economie.
ViDA stands for “VAT in the Digital Age” and is an ambitious reform package consisting of three pillars:
Digital reporting and e-invoicing
This means real-time data exchange on transactions within the EU, including a mandatory shift to e-invoicing.
Expansion of VAT obligations for platforms
This introduces new rules for digital platforms that mediate the sale of goods or services.
Harmonisation of VAT registrations
This simplifies VAT obligations so that multiple VAT registrations in different member states will no longer be necessary.
The European Commission wants to tackle VAT fraud, digitise processes, and build a more efficient system that better responds to the current digital age.
What will change with ViDA?
The proposed changes bring about some fundamental changes:
E-invoicing is becoming the norm for cross-border B2B transactions within the EU, with PEPPOL, for example, being mandatory in Belgium from 2026.;
Businesses will need to carry out digital reporting of VAT data in almost real-time.;
New obligations for digital platforms to collect and pay due VAT;
Mandatory introduction of new systems to support reporting obligations;
Better alignment of national VAT rules through a harmonised approach.
These changes will mainly impact businesses that operate in different EU countries, or use digital platforms for their sales.
ViDA is important because it offers a streamlined and efficient way to discover and manage new research opportunities.
VAT in the Digital Age addresses the need to make the VAT system fit for the digital age. The current system is outdated, vulnerable to VAT fraud, and inefficient.
ViDA offers multiple benefits such as:
Reduction of administrative burdens;
Better government control;
More equal treatment of businesses via a fairer playing field;
Better alignment with the digital transformation of business;
More clarity and efficiency for various stakeholders, such as entrepreneurs, tax authorities, and accountants.
So it is not only a technological, but also an economic and legal modernisation.
The impact on e-commerce
For E-commerce businesses, ViDA means a significant change. Below we list the new obligations:
The use of e-invoicing in cross-border transactions;
Automatic reporting of transaction data.;
Simplification of VAT registrations for sales in multiple countries.;
Stricter rules for sales via platforms.
Businesses will therefore need to modernise their systems to enable reporting, digitisation, and compliance with the new regulations.
Do you need expert advice to ensure you remain compliant with the new rules and avoid risks? One of our advisors is ready to help!
Digital reporting and e-invoicing
One of the most far-reaching aspects of VAT in the Digital Age is the introduction of digital reporting obligations and mandatory e-invoicing for B2B transactions within the EU.
What does:
Invoices must be created electronically and sent via certified systems;
VAT information for transactions must be reported to tax authorities in near real-time.;
This will tackle VAT fraud and increase transparency.;
Businesses will need to adapt their current invoicing and accounting systems.
The EU expects that this digital reporting will facilitate all EU member states using a uniform standard in the future.
When will ViDA be introduced?
The expected go-live date for ViDA is being planned in phases:
From 2026: mandatory e-invoicing for cross-border B2B transactions within Belgium;
2028–2030: phased introduction of digital reporting obligations;
The implementation will proceed in close cooperation with the European Parliament, the European Commission, and the Member States.
Although the introduction is still a few years away, it is mandatory to make the necessary preparations now, such as investing in new systems and processes.
So look after your business well and seek expert advice in good time. We are always here for you!
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