The European Union has taken a significant step in modernizing its value-added tax (VAT) system with the adoption of the VAT in the Digital Age (ViDA) package. The Council of the EU has officially approved a set of new laws aimed at making VAT rules more suited to the digital economy, reducing administrative burdens for businesses, and combating tax fraud.
The package adopted today covers a directive, a regulation and an implementing regulation and brings changes to three different aspects of the VAT system. 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 costly registrations for VAT in every member state in which they do business
The directive, regulation and implementing regulation all enter into force on the twentieth day following their publication in the Official Journal of the EU. While the regulations are directly applicable, the directive will have to be transposed into national law.
Background
On 8 December 2022, the Commission presented the ‘VAT in the digital age’ package which consists of three proposals:
- a proposal for a Council directive amending directive 2006/112/EC as regards VAT rules for the digital age
- a proposal for a Council regulation amending regulation (EU) No 904/2010 as regards the VAT administrative cooperation arrangements needed for the digital age
- a proposal for a Council implementing regulation amending implementing regulation (EU) No 282/2011 as regards information requirements for certain VAT schemes
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