VAT in the Digital Age: After the EU ViDA approval: What happens next?

As you may recall from our previous blog post, ViDA consists of three pillars, the first being the subject matter for this blog:

1. E-invoicing and Digital Reporting Requirements (DRR)
2. How to treat the Platform Economy (e.g. Uber, Airbnb etc.)  from a VAT perspective
3. Single VAT registration

ViDA’s first pillar aims to close a substantial part of the so-called “VAT gap”, by making B2B e-invoices and digital reporting to tax authorities on a transactional basis (by re-using data from the e-invoices) mandatory for cross-border invoicing between EU-countries.

2025

With ViDA now approved, EU countries are free to implement domestic e-invoicing mandates without seeking “derogation” (permission) from the EU. ViDA sets a minimal regulatory framework for domestic mandates. ViDA’s main focus is instead on intra-community cross-border invoicing and DRR.

To demonstrate that Peppol is Europe’s best chance at doing ViDA compliant trade, without introducing intrusive technology, OpenPeppol is running a ViDA-pilot, which hopefully will encourage more EU member states to embrace the Peppol 5-corner model. Today, the country with the highest Peppol penetration is the non-EU member Norway. The ViDA pilot is still in its initial stages, with the architecture currently being reviewed, but we can expect things to get more concrete in 2H2025.

Extensions to EN16931 are now under way in the EU standards body CEN. EN16931 is a cornerstone of ViDA and is often referred to as the “European standard” or “European Norm”. EN16931 debuted as the “semantic data model” in conjunction with the 2014/55/EU directive requiring e-invoicing in the public sector. While ViDA stipulates EN16931 as mandatory invoice content, it was originally defined for B2G and is therefore in need of amendments to also suit B2B.

Another cornerstone is VIES: A new version of the European Commission’s VAT Information Exchange System is under development towards launch in 2030. It will replace today’s VIES search engine for validating EU VAT numbers and will be a database for intra-community transactions reporting and taxpayer identification information, including VAT identification numbers, etc.

2030

 When ViDA’s first pillar kicks into effect for cross-border invoicing and DRR on 1 July 2030, there will be some discrepancies between how the early “regulatory forecasts” foretold that ViDA would be, and how it now actually turns out. If you never had time to memorize any of the many guidance documents on ViDA floating around in 2022-2023, you may actually be better off, since you will not have to go through this expectation level adjustment exercise:

• Summary invoices: Initially expected to be banned, they are now allowed if issued within 10 days following the end of the calendar month
• Hybrid invoices: While the early sentiment of ViDA seemed to want to ban anything but proper structured e-invoices, hybrids such as ZUGFeRD/Factur-X are now OK as long as the EN16931 data is included in the package
• “Real time” reporting: The initial ambition to require that an e-invoice be issued within 2 days of the chargeable event is relaxed to 10 days, with reporting taking place:
  • For the supplier - in real time
  • In self-billing – within 5 days of the chargeable event
  • For the buyer – within 5 days of receiving the invoice
• Reporting exemption: Under certain conditions, the buyer may now be exempt from reporting

Furthermore, there remains a degree of uncertainty and ambiguity that could be clarified with additional Explanatory Notes from the EU:

2030-2035

 By 2035, the ViDA text tells us that countries which have a domestic transaction-based reporting system in place since 1 January 2024 or earlier (and later countries by 2030), will have to “adapt” and “align” their schemes with the ViDA cross-border DRR.

But what does this mean in practice? Most obvious is that e-invoice data reported must comply with EN16931. But what more does it really impose or put a stop to, how about:

• Pre-clearance? In the years leading up to ViDA’s approval, it was widely assumed that pre-clearance models would not be allowed. The finally adopted legal text is, however, pretty elusive in this matter, and there are different views whether pre-clearance is explicitly forbidden.            
• Central national platforms/public portals? The directive safeguards the freedom of: “choosing the means to issue and send their invoices to their customer, meaning either directly by themselves or with the intermediation of third parties, or, if available, through a public portal.” An interpretation of this would be that, while a public portal would be allowed as one alternative, it would not be allowed to be exclusive.

Sven Norin, Product Area Manager, Tietoevry Industry.

One should these days be forgiven if one feels that the normative pressure of the ViDA directive is weak with regards to what constitutes full harmonization. There is a risk of a gap appearing between what is factually required by the letter of the law and opinionated interpretations by stakeholders, - says Sven Norin. 

This is not only a matter for government officials and policy makers in the affected EU countries but may also impact multinational companies operating across these jurisdictions, already invested in domestic e-invoicing and reporting schemes.

ViDA’s impact outside EU?

Not an exhaustive world map, but some examples of formal adoption, inspiration or commercial forces:

• EEA-EFTA countries: While the aim of the European Economic Area is to extend the EU's internal market, EU law does not automatically apply to these countries:
  • First, the EEA Joint Committee must decide to incorporate the directive into the EEA Agreement. As the directive concerns the functioning of the internal market and VAT rules, it is likely that ViDA will be deemed relevant. However, a search of the EFTA website currently yields no results for “2025/516” among recent Joint Committee Decisions.
  • Let’s take Norway as an example:
  • As an EEA-member, Norway has followed before by implementing 2014/55/EU into local law regarding e-invoicing in the public sector.
  • In the absence of any EEA decision, it is reasonable to expect that Norway will at least implement a domestic B2B e-invoicing and DRR mandate. This mandate will likely build on Norway’s experience as a participant in the 5-corner model ViDA pilots.
  • The Norwegian Ministry of Finance’s directive to the Norwegian Tax Authority to review options for introducing mandatory e-invoicing and digital bookkeeping does not reveal any features, but the report is expected this month, so we will soon see.
• Asia-Pacific and the Middle East: Inspired by and ahead of the EU in implementing similar e-invoicing and DRR-mechanisms:
  • Singapore: Taking inspiration and advice from the EU, Singapore has already implemented its tax authority as a 5th corner in its “Invoice Now”-branded Peppol network.
  • United Arab Emirates: The UAE is rolling out a Peppol-based 5 corner e-invoicing and DRR model with an impressive momentum
• Market dynamics: It can also be envisioned that a supplier wholly outside EU jurisdiction, sending e-invoices to a customer in the EU, may be commercially pressured by the buyer to issue e-invoices complying with EN16931 for a better fit with the customer’s ViDA-compliant platforms and processes.

What is Tietoevry doing, and how will you benefit?

As an active participant in the Peppol ViDA pilot, we aim to contribute to a broadening appreciation for Peppol as the best choice for ViDA compliant supplier/buyer-collaboration, with the Tax Authority “listening in” in an unobtrusive way.

In addition to countries already having domestic e-invoicing and DRR-mandates in place, ViDA’s removal of derogation may now encourage further EU countries to implement domestic mandates. Tietoevry will be working systematically at enabling you to have compliant connectivity in these markets.

As always, we continue to participate in forums, trade associations and standards bodies such as TIEKE, NEA, OpenPeppol, GENA and CEN to enable you to benefit from the increasing value of the digitized network economy, while protecting you from its complexity.

Do you want to get in touch or if you require any additional information please contact us here.