European Council Adopts VAT in the Digital Age Package

On March 11, the European Council a directive, a regulation and an implementing regulation on the changes to three different aspects of the VAT system functioning with the help of digital means, collectively called “VAT in Digital Age (ViDA)”. The new rules will:

– make VAT reporting obligations for companies who sell goods and services to businesses in another EU member state fully digital by 2030;

– require online platforms to pay VAT on short-term accommodation rentals and passenger transport services in most cases where individual service providers do not charge VAT;

– improve and expand online VAT one-stop-shops so that businesses do not have to go through registrations for VAT in every member state in which they do business.

All elements of the package – directive, regulation and implementing regulation – will enter into force on the twentieth day following their publication in the Official Journal of the EU. While the regulations are directly applicable, Member States must transpose the directive into their national legislations.

As a reminder, the ViDA package introduces the following measures:

– uniform real-time digital reporting for VAT purposes based on e-invoicing for cross-border transactions, which will provide Member States timely with the information they need to combat VAT fraud;

– platform economy operators in the passenger transport and short-term accommodation rental sectors will become responsible for collecting and remitting VAT to tax authorities, where the underlying supplier does not charge VAT;

– resolving the issue of multiple VAT registrations in different Member States, expanding the “VAT One Stop Shop” model for shopping-commerce companies.

Press release