Regulatory updates - EU

On March 11, 2025, the European Council provided the final stamp of approval on the ViDA proposal, fully ratifying the legislation. The core principles of ViDA remain, addressing digital reporting requirements (DRR), the treatment of VAT in the platform economy, and single VAT registration.

The message remains clear within the Union, as stated by the Polish Minister of Finance, Andrzej Domanski: “The EU’s VAT rules need to keep track of the digital transformation of our economies. This package will give the EU a competitiveness boost, help combat VAT fraud, and cut the administrative burden for businesses.”

Moving forward, the entry into force of the legislation is the 20th day following its publication in the Official Journal of the EU. Beyond this, it is expected that while the regulations within the package are directly applicable, the legislation will have to be further transposed into national law.

This reform is part of a broader legislative package amending the EU VAT Directive and EU VAT Implementing Regulation. The shift is expected to enhance efficiency, lower costs, and improve the overall management of VAT exemptions in the EU. Until the 2032 deadline, Member States may continue using paper certificates or existing electronic systems.

To support a smooth transition, the European Commission will work closely with Member States on technical implementation.

The initiative follows the Commission’s proposals from July 8, 2024, a political agreement on December 10, 2024, and a European Parliament opinion on November 13, 2024. The legislation takes effect 20 days after its publication in the Official Journal of the European Union.

On February 12, 2025, the VAT in the Digital Age (ViDA) proposal was approved by the European Parliament, marking a massive milestone for the future of digitalization across the European Union. The bill was approved with an overwhelming majority of 589 votes in favor and only 52 votes against the bill with 10 abstentions.

The proposal has been under legislative proceedings since December 8, 2022, when it was first presented. The European Council is expected to ratify the bill in March 2025.

The bill introduces three pillars with new requirements to combat VAT fraud and harmonize the treatment of VAT across the EU:

• E-invoicing and real-time digital reporting
• Single VAT registration
• Updated rules for the platform economy

From an e-invoicing and digital reporting perspective, ViDA is bringing many changes that will have a great impact on today’s landscape. From the time of ratification, Member States may mandate true e-invoicing for domestic transactions, without the need to obtain the derogation ("permission") from the EU.

Starting 2030, e-invoicing and digital reporting will become mandatory for Intra-community transactions. As a part of the bill, Member States with pre-existing CTC models will have to adhere to the ViDA requirements by 2035, to ensure a harmonization within the union.