VAT in the Digital Age (ViDA): The future of VAT

E-invoicing and digital reporting obligations

The introduction of e-invoicing in Germany from 1 January 2025 is now also covered by the VAT Directive. The draft directive contains important regulations for the Europe-wide introduction of e-invoicing:

• First opportunity to introduce e-invoicing directly after publication of the directive (e.g. on 1 January 2025 in Germany)
• Europe-wide mandatory introduction of the e-bill by 1 July 2030 
• Restriction of electronic collective invoicing from 1 July 2030 to one month's sales (invoicing by the 10th of the following month)
• Electronic reporting for cross-border transactions (DMP) is to replace the previous recapitulative statement (ZM) from 1 July 2030. This "digital reporting" is intended to provide the tax authorities with information on transactions relating to other member states in a timely manner.

One registration for VAT purposes

Digitalisation enables companies to expand globally in the shortest possible time and with relatively little effort. One of the main objectives of the ViDA Directive was therefore to avoid registration obligations for entrepreneurs in other EU countries as far as possible in order to prevent unnecessary costs.

Changes from 1 July 2028 will extend the so-called OSS (One-Stop-Shop) procedure and add intra-Community transfers.

Art. 194 will also be revised. The previous option to apply the reverse charge procedure will become mandatory from 1 July 2028. This obligation applies if the supplier is neither established nor registered for VAT in the Member State in which the supply is made and the customer also fulfils one of these conditions.

The consignment stock regulation introduced by the "quick fixes" on 1 January 2020 is to be discontinued due to the new regulations. It is still applicable to storage until 30 June 2028 and will therefore expire on 30 June 2029 after the 12-month period for storage has expired.

In addition, an extension of the so-called "supply chain fiction" for online marketplaces is planned, as online retailers are particularly affected by the registration obligations due to global trade.

Extension of the supply chain fiction

Until now, the supply chain fiction has only applied to B2C deliveries made in the EU via an online marketplace by a trader based in a third country. From 1 January 2027, this will also apply to B2B supplies carried out by an online trader based in a third country via an online marketplace. The third-country trader makes a tax-free supply to the online marketplace, which in turn makes a regular supply to the end customer.

As of 1 January 2030, such a fictitious service chain is also to be introduced for the short-term rental of accommodation and transport of passengers offered via digital platforms.

Practical consequences

The ViDA draft directive contains many welcome approaches to standardising and simplifying VAT in the EU. However, in view of the deadlines for implementing the directive, many of the regulations listed are still "dreams of the future". However, the deadlines also offer companies the opportunity to prepare for the upcoming legal changes (OSS, supply chain fiction, etc.) at an early stage and to familiarise themselves with the new formal changes (amended VAT return, collective invoice, etc.).

With regard to e-invoicing, this is now the final confirmation that the future of invoicing (within the EU) will be electronic. As a company with business relationships in other EU countries, this should be seen as a further wake-up call to digitise your invoicing.