In December 2022, the European Commission proposed the biggest reform to EU VAT since the single market launched in 1993. The package, which was formally adopted in March 2025, will fundamentally change how VAT is reported, collected and exchanged across all 27 Member States over the next decade.
The legislative package, VAT in the Digital Age, or ViDA, is designed to:
The reforms are reshaping how VAT is reported, validated and exchanged across EU Member States. Through transitioning to e-invoicing and using digital reporting tools, ViDA will create a unified VAT system across the EU.
We explore why the EU is pushing ahead with ViDA reform and what that means for businesses.
A 2023 report exploring the EU’s VAT gap revealed that EU Member States lost around €61 billion in VAT revenue in 2021 – that’s the difference between what should have been collected under full compliance and what actually reached national treasuries.
It’s important to point out that not all of that figure is fraud, because it also includes revenue lost to insolvencies, bankruptcies and paperwork errors. What stands out is the spread between countries. For example, Romania’s VAT gap came to 36.7% of theoretical VAT revenue in 2021, while the Netherlands had a gap close to zero.
Some countries are already making impressive progress in closing the gap. Latvia, Hungary, Poland and Slovakia each cut their VAT gaps by more than 15 percentage points between 2013 and 2021. And what did these four countries have in common? They require VAT-registered taxpayers to file transactional data with the authorities.
The contrast between countries that have digitised VAT reporting and those that haven’t is what the EU’s legislative package is trying to close.
ViDA is made up of three pillars:
Let's explore what each pillar means for businesses and tax authorities.
ViDA’s first pillar is a major update to VAT reporting and invoicing. Under current systems, businesses come up against a range of obstacles, including VAT fraud, fragmented rules that create complexity and errors, and inefficient invoicing systems that struggle to identify fraud.
The legislative package introduces real-time digital reporting for cross-border trade based on e-invoicing.
Under the new rules, all Member States must:
From 1st July 2030, intra-EU cross-border B2B supplies will be subject to mandatory e-invoicing aligned with EN 16931 and near-real-time digital reporting, replacing the current EC Sales List system with a harmonised, transaction-level model.
Member States won’t need prior approval to introduce domestic e-invoicing mandates, and incompatible national formats for cross-border trade don’t have a long-term future in light of ViDA.
By 1st January 2035, Member States with a domestic digital real-time transaction reporting obligation before 1st January 2024 must have aligned their systems with EU standards. This is the final phase of the ViDA package.
ViDA’s second pillar focuses on the platform economy. Under current rules, VAT is built into the price of transactions like hotel rooms or taxis. However, when a person books a stay through a short-term rental platform or a journey with a ride-hailing app, VAT isn’t built in because the host or driver isn’t VAT-registered. This puts traditional providers at a significant disadvantage and costs EU Member States in VAT revenue.
The legislative package introduces a “deemed supplier” rule that shifts VAT responsibility from individual hosts or drivers onto the platforms themselves.
Under the new rules, all Member States must:
From 1st July 2028, Member States can voluntarily impose the deemed supplier rules, and from 1st January 2030, it becomes mandatory.
ViDA’s third pillar simplifies cross-border VAT registration. Today, businesses have to register for VAT in each country. The existing One Stop Shop (OSS) and Import One Stop Shop (IOSS) eased this problem for cross-border e-commerce, but many transactions still exist outside their scope. ViDA widens OSS so businesses can handle most of their EU VAT obligations under a single registration.
Under the new rules, all Member States must:
If the specifics of e-invoicing still feel a bit abstract, our e-invoicing explainer guide [link to ‘E-Invoicing Explained’ article] is a great place to start.
If you’re trying to work out which national mandates affect you, our country-specific e-invoicing timelines guide is a must-read.
If you’re looking for a document management platform to make e-invoicing compliance simple, our guide exploring Lasernet’s e-invoicing capabilities [link to ‘How Lasernet Supports E-Invoicing’ article] is your next port of call.
From 1st July 2028, extended OSS and the mandatory reverse charge will come into effect.
ViDA benefits tax authorities and businesses by:
The e-invoicing and near-real-time reporting requirements of ViDA eliminate hours of manual work for businesses’ finance teams and tax authorities, with invoices moving in structured formats that systems can read directly. The European Commission’s impact assessment puts the package’s net benefits at between €172 billion and €214 billion over its first decade.
The European Commission estimates the move to e-invoicing alone will bring down administrative and compliance costs for EU traders by over €4.1 billion a year over the next 10 years, with total taxpayer savings of around €51 billion between 2023 and 2032.
ViDA puts businesses and tax authorities on the same page in close to real time. Instead of authorities reconstructing transactions after the fact, they see them as they happen. That shared view will make audits less complex and less adversarial, since both parties are working from the same set of figures.
Most VAT fraud relies on the time gap between a transaction happening and an authority seeing it. Near-real-time reporting closes this gap. The European Commission expects ViDA to help recover up to €11 billion a year in revenue lost to fraud.
ViDA isn’t just a compliance issue for EU Member States. Any organisation that sells into the EU, trades with EU VAT-registered entities or holds VAT registrations in Member States is affected by the 2030 cross-border requirements.
Even if your immediate focus is on compliance with domestic e-invoicing mandate deadlines in 2026 and 2027, your systems should be built with cross-border structured exchange and near-real-time reporting in mind. Designing country-by-country silos might have made sense a few years ago, but today it risks expensive reworks to ensure compliance before the 2030 cross-border deadline.
Organisations that align invoice data with EN 16931, implement scalable, API-driven reporting and centralise exception handling will have everything in place and ready for the ViDA changes.
There’s a long runway to prepare for the ViDA changes, particularly the digital reporting requirements. But for any business operating across Member States, the work to get the systems and processes needed to meet the requirements needs to start well before then.
What comes next for your organisation depends on where you sit:
If the specifics of e-invoicing still feel a bit abstract, our e-invoicing explainer guide, is a great place to start.
If you’re trying to work out which national mandates affect you, our country-specific e-invoicing timelines guide is a must-read.
Find out how Lasernet allows you to generate, send and track compliant e-invoices anywhere, in any approved format, from one platform by booking a demo via the form below.