EU - VAT in the Digital Age Discussions and Developments

After a substantial period of over two and a half years since its initial proposal, the EU VAT in the Digital Age (ViDA) three-pillar reform package is on the brink of potential adoption at the following Economic and Financial Affairs Council (ECOFIN) meeting on June 21, 2024. 

This positive outcome, expected at the last meeting held on May 8, 2024, was temporarily halted by Estonia's veto against using the 'deemed supplier' rules for the platform economy in the transport and accommodation sectors. 

As the new ECOFIN meeting approaches, it remains to be seen if the agreement on the Second Pillar—platform economy—will be reached since the other two pillars were initially approved.

ViDA - Updates

Should the consensus among Member States be reached and the revised proposal of the EU ViDA reforms package approved by the ECOFIN, rules regarding the new digital platform and single VAT registration rules would enter into force on  July 1,  2027, instead of January 1, 2025, as initially proposed.

Under newly proposed rules, platforms facilitating short-term accommodation rentals and road passenger transport will be required to act as deemed suppliers for VAT purposes. However, in contrast to the original proposal, the revised proposal allows Member States to exclude short-term accommodation rentals and road passenger transport services provided by small and medium-sized businesses participating in the 2025 SME scheme from the deemed seller rules.

The ViDA proposal has updated the concept of short-term accommodation. If accepted, short-term accommodation will cover renting periods of up to 30 days, not 45 days as it stands today. 

The timelines for implementing e-invoicing and digital reporting rules have also been postponed. They will become effective on July 1, 2030, instead of January 1, 2028. 

Regarding the e-invoicing requirements, the revised and updated proposal states that the e-invoice structure will be based on Directive 2014/55/EU. All Member States planning to implement DDR for domestic sales must comply with the new DDR requirements. On the other hand, Member States with existing domestic digital reporting obligations must align with the new EU-wide DDR requirements by January 1, 2035. 

Conclusion

The revised ViDA proposal postponed the initially proposed implementation schedule and addressed some of the previously stated criticisms that prevented the earlier adoption of this reform package. It remains to be seen if the political agreement will be reached and if this new regulatory framework will be adopted.

Source: VAT in the Digital Age (ViDA) Revised Proposal