VAT in the Digital Age (ViDA) solution

The VAT in the Digital Age (ViDA) initiative is a proposal by the European Commission to modernize and improve the EU's VAT system. This initiative aims to make the VAT system more business-friendly, resilient to fraud and better suited to the digital economy.

Here are the key components of the ViDA initiative:

1. Updated rules for the platform economy: Platforms facilitating services like passenger transport and short-term accommodation will be responsible for collecting and remitting VAT when their users do not. This ensures a uniform approach across the EU and simplifies compliance for small businesses.

2. Single VAT Registration: Building on the existing VAT One Stop Shop (OSS) model, this proposal allows businesses selling to consumers in another EU country to fulfill their VAT obligations through an online portal in one EU country.

3. Real-time digital reporting (DRR): This involves implementing real-time digital reporting for cross-border trade based on e-invoicing. This change aims to reduce VAT fraud and lower administrative costs for businesses.

These measures are designed to help EU countries collect more VAT revenue, reduce fraud and make the VAT system more efficient for businesses, especially SMEs.

ViDA introduces several technical changes to e-invoicing aimed at modernizing and streamlining VAT processes across the EU. Here are the key changes:

1. Mandatory e-invoicing: From July 2030, e-invoicing will become mandatory for cross-border business-to-business (B2B) and business-to-government (B2G) transactions within the EU. E-invoices must be issued in a standardized format (generally compliant with EU standards like EN16931) and within 10 days of the supply.

2. Real-time digital reporting: The introduction of Digital Reporting Requirements (DRR) will require businesses to report e-invoice data to tax authorities in real-time. This aims to reduce VAT fraud and improve tax collection efficiency.

3. Removal of EC sales list: The EC Sales List, which businesses currently use to report cross-border sales, will be phased out. Instead, the necessary data will be captured through the new e-invoicing and digital reporting systems.

4. Interoperability and standardization: The initiative promotes interoperability and standardization of e-invoicing systems across EU member states, making it easier for businesses to comply with VAT regulations regardless of where they operate within the EU.

These changes are designed to enhance transparency, reduce administrative burdens, and combat VAT fraud more effectively.

Businesses will need to transition to e-invoicing for cross-border transactions within the EU. This means that traditional paper invoices will no longer be sufficient, and companies must adopt e-invoicing systems and solutions that comply with EU standards. 

Additionally, the introduction of real-time digital reporting requirements will necessitate that businesses report invoice data to tax authorities promptly. This will require that e-invoicing systems are capable of integrating with government platforms.  

We operate an open, global network that allows businesses to exchange electronic invoices and other business documents securely and compliantly. This network connects with various government e-document platforms and supports compliance with e-invoicing regulations in over 80 countries. 

Our technology integrates with any ERP system, invoice workflow tool or tax technology. This ensures that businesses can continue their operations without needing to overhaul their existing systems. 

ViDA impacts businesses of all sizes, from small and medium-sized enterprises (SMEs) to large multinational corporations. 

EU-based businesses: All businesses within the EU will need to comply with the new e-invoicing and real-time digital reporting requirements.

Non-EU businesses: Companies outside the EU that sell goods or services to customers within the EU will also need to comply with ViDA regulations. This includes adopting e-invoicing and ensuring VAT compliance for cross-border transactions.

While ViDA directly affects businesses dealing with the EU, its influence extends globally as it sets a precedent for digital VAT compliance. Other regions may adopt similar measures, prompting businesses worldwide to enhance their e-invoicing and VAT reporting systems. 

Recommendations for businesses within and beyond the EU: 

• Upgrade systems: Invest in e-invoicing software that supports real-time reporting and compliance with EU standards.
• Ensure data quality: Implement processes to maintain high-quality, accurate data.
• Stay informed: Keep up-to-date with evolving regulations and best practices for VAT compliance.

Yes, the VAT in the Digital Age (ViDA) initiative will require businesses to update their data security protocols to ensure compliance with the new e-invoicing and real-time reporting requirements. Here are the key changes and considerations:

Enhanced data protection: ViDA requires businesses to implement robust data protection measures to safeguard sensitive financial information. This includes using encryption for data transmission and storage to prevent unauthorized access

Compliance with GDPR: Businesses must ensure that their data security practices comply with the General Data Protection Regulation (GDPR). This involves protecting personal data, ensuring data minimization, and maintaining transparency about data processing activities.

Secure integration with government platforms: E-invoicing solutions must securely connect to government platforms for real-time reporting. This requires secure APIs and protocols to ensure data integrity and confidentiality during transmission

Regular Security Audits: ViDA documentation recommends conducting regular security audits and vulnerability assessments to identify and mitigate potential security risks associated with e-invoicing and digital reporting.

As the first global ViDA-ready provider, we are committed to helping businesses transition smoothly to ViDA compliance with our robust e-invoicing and compliance solutions. Here’s how our solutions support this transition:

Key support areas

1. Seamless integration: Our platform integrates with any ERP system, ensuring that you can continue using your existing software while meeting ViDA requirements. This integration facilitates the smooth exchange of e-invoices and other business documents.

2. Real-time reporting: We support real-time digital reporting, which is crucial for compliance with ViDA's new requirements. Our platform ensures that your invoice data is transmitted to tax authorities promptly and accurately.

3. Compliance management: We provide comprehensive compliance support, helping you navigate the complex regulatory landscape. Our platform is designed to comply with e-invoicing regulations in over 80 countries, ensuring that you meet both local and EU requirements.

4. Data security: We emphasize robust data security measures, including encryption and secure data transmission protocols. This ensures that your sensitive financial information is protected during the e-invoicing process.

5. Automation: Our platform offers automation solutions for accounts receivable (AR) and accounts payable (AP), reducing manual handling, minimizing errors and ensuring timely invoice delivery.

Benefits for your business

• Efficiency: Automating your invoicing processes and centralizing your compliance strategy significantly improves operational efficiency.
• Cost savings: Transitioning to e-invoicing reduces costs associated with paper invoices and manual processing.
• Scalability: Our solutions are scalable, making them suitable for businesses of all sizes and industries.

By leveraging our e-invoicing and compliance solutions, you can ensure a smooth transition to ViDA compliance, enhance your operational efficiency and maintain robust data security.