Vat in the Digital Age (ViDA) Proposal Published

After several postponements, the EU’s Vat in the Digital Age (ViDA) proposal was finally published on 8 December 2022.  The proposal includes amendments to three EU legislative acts: the VAT Directive (2006/112/EC), the Council Implementing Regulation (EU 282/2011) and the Council Regulation on Administrative Cooperation (EU 904/2010).

ViDA timeline

The Vat in the Digital Age (ViDA) proposal includes the following changes:

• From January 2024, e-invoicing will become the default method of issuing invoices, thanks to which the consent of the e-invoice recipient will no longer be required
• From January 2024, a new definition of electronic invoices will be introduced - as a result, only files with a specific structure will be considered as electronic invoices
• The content of e-invoices will be extended with mandatory payment details
• From 2028, there will be a mandatory DRR (digital reporting requirement) in the form of a tax reporting scheme in close to real time for intra-community transactions
• Member States will no longer need a derogation permission to make e-invoicing mandatory

Implementation of the changes within the indicated dates will be preceded by the public consultations. If successful, the changes to e-invoicing will bring major changes affecting almost all European taxpayers from 2024 onwards, with the changes finally taking place in 2028.

Structured electronic invoices

The most significant change will be the one introduced from January 2024, which relates to the definition of an electronic invoice in the VAT Directive. It has been changed in order to harmonize the concept with Directive 2014/55/EU on electronic invoicing in public procurement. As a result, only structured electronic invoices will be valid, and PDF files will no longer be accepted.

Electronic invoicing will be the default system for the issuance of invoices in all Member States. As a consequence, the issuance of electronic invoices will no longer be subject to the acceptance of the recipient.

VAT digitalization

To accelerate the digitization of VAT invoicing, Member States will be able to impose e-invoicing issuance mandates, without having to obtain permission for special derogations, which has been the case until now. However, this change is subject to certain conditions: issuing and transmitting electronic invoices will not depend on prior mandatory authorization or verification by tax authorities. This eliminates the introduction of classic clearing models, but countries that have already introduced mandates based on the EU authorization and on the basis of previous requirements will be able to postpone their adaptation to the latest guidelines. The initiative assumes that this adjustment will take place by 2028 at the latest.