ViDA: Key Developments in EU Tax Reform for the Digital Age

VAT in the Digital Age (ViDA) is the most important legislative regulation that was adopted in 2024 on the EU level when it comes to VAT. Following the agreement regarding the ViDA proposal that was reached at the ECOFIN meeting on November 5, further developments and advancements have been made in the implementation process.

One of those advancements was the issuance of the Draft European Parliament Legislative Resolution (Draft Report) regarding the Council’s Draft Directive Amending EU VAT Directive in accordance with the ViDA package.

The Importance of the Draft Report

The draft contains the recapitulation of the previous achievement in the process from December 2022 when the European Commission presented the ViDA package, that includes three proposals, over November 2023 when the European Parliament was consulted and delivered its opinion, up to the November 2024, when the Council agreed on the ViDA package.

Nevertheless, due to the differences between the Commission’s proposal, on which the European Parliament was consulted, and the final text, the Council decided to consult with the European Parliament once again on the final version.

The European Parliament approved the Council’s draft amending the EU VAT Directive due to adoption of the ViDA package, and requested to be notified and consulted regarding any further changes from the text that was presented.

One of the most notable conclusions made by the European Parliament was referring to the implementation deadlines. Upon receiving the initial Commission proposal, the European Parliament stated that longer implementation deadlines should be defined. Now, in the final version of the text, the Council even further extended the deadlines, which is in line with the suggestion made by the European Parliament.

Conclusion

The positive tone of the European Parliament Draft Report is one more step in the right direction to implementing ViDA. Although this outcome could be expected, following the suggestions made in the Parliament's initial opinion, the fact that the Parliament and Council are agreeing on the implementation deadlines and other important rules is a encouraging for the implementation of this historical EU tax reform.

Source: Draft European Parliament Legislative Resolution

What is the ViDA package and its significance for EU VAT reforms?

The ViDA package represents a comprehensive reform to modernize VAT regulations in the EU, focusing on e-commerce and digital trade, adopted in 2024.

What does the European Parliament Draft Report say about ViDA?

The Draft Report outlines key developments, including extended implementation deadlines and alignment between Parliament and Council on VAT reforms.

When was the ViDA proposal initially introduced?

The European Commission presented the ViDA package in December 2022, initiating significant steps toward modernizing VAT for the digital age.

How does the ViDA package affect implementation deadlines for VAT changes?

The final Council text extended the implementation deadlines, aligning with the European Parliament’s recommendations for a phased approach.

Why did the European Parliament review the ViDA package again?

Due to differences between the initial Commission proposal and the final text, the Council consulted the Parliament to ensure alignment on key changes.

What industries will the ViDA reforms impact the most?

ViDA primarily impacts e-commerce and digital trade by simplifying VAT compliance and ensuring fair taxation in the EU market.

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