The European Parliament has approved the VAT in the Digital Age (ViDA) Package on 12 February 2025.
This update aims to modernise the EU’s VAT system, fight VAT fraud, and simplify administrative tasks for small businesses and service providers.
These changes will require that by 2030 online platforms must pay VAT for services provided through them in most of the cases where the individual service providers do not charge VAT.
This will put an end to a distortion of the market because similar services provided in the traditional economy are already subject to VAT. This distortion has been most significant in the short-term accommodation rental sector and the road passenger transport sector. Member states will have the possibility of exempting SMEs from this rule, an idea which Parliament had also pushed.
The update will also fully digitalise VAT reporting obligations for cross-border transactions by 2030, with businesses issuing e-invoices for cross-border business-to-business transactions and automatically reporting the data to their tax administration. With this, tax authorities should be in a better position to tackle VAT fraud.
To simplify the administrative burden for businesses, the rules beef-up online VAT one-stop-shops so that even more businesses with cross-border activity will be able to meet their VAT obligations through a single online portal and in one language.
