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Legislation

VIDA (VAT IN THE DIGITAL AGE)

VIDA (VAT IN THE DIGITAL AGE)

ViDA is on the agenda across Europe in the realm of electronic invoicing and VAT reporting. In brief, ViDA is a directive proposal from the European Commission aimed at modernizing the handling of VAT in European member states.

In 2020, it was estimated that European member states lost 93 billion EUR due to VAT fraud. Therefore, ViDA is seen as a method to recover some of these billions for the national treasuries.

KEY AREAS OF THE VIDA PROPOSAL

The European Commission’s preliminary proposal is based on the following key areas:

  • DRR (Digital Reporting Requirement):
    • A new real-time VAT reporting system based on e-invoices.
  • Updated VAT Rules:
    • Introduction of new rules aimed at creating a more streamlined and fair competitive environment.
  • Single VAT Registration:
    • Introduction of a simple and straightforward VAT registration process for companies selling to customers across EU borders.

If the ViDA proposal is approved, the following timeline will apply:

  • December 2022: The European Commission publishes the ViDA proposal.
  • January 2024: Mandatory use of e-invoices becomes possible without EU approval.
  • January 2028: Digital VAT reporting requirements become mandatory for all cross-border transactions and optional for domestic transactions, to be submitted to local tax authorities.
  • November 2024: End-of-life for OIOUBL 1.13.

REPORTING OF B2B TRANSACTIONS WITHIN THE EU

mySupply focuses on the Digital Reporting Requirement (DRR) as this area is of particular interest. The reporting requirement will apply to all B2B transactions within the EU (cross-border). In other words, companies that engage with other businesses across national borders will need to report tax data to their local tax authorities within two days after sending an electronic invoice to the customer.

This means that reporting requirements will be closely tied to the mandatory use of electronic invoicing for B2B trade within the EU. The EU Commission’s proposal mentions that the data to be sent to local tax authorities should be based on the European standard for electronic invoices, also known as EN16931. The standard is already well-known and is part of European legislation, supported by major document networks like Peppol.

Reporting of domestic B2B transactions

In the ViDA proposal, specific reporting requirements for trade between businesses operating within the same country are not specified. It is up to each member state to decide whether to introduce national VAT reporting requirements. If a member state chooses to introduce national VAT reporting requirements, they must follow EU guidelines, using the European standard as the basis for reporting VAT documentation.

CONSEQUENCES OF VIDA IMPLEMENTATION

Electronic invoicing will become the new standard for issuing invoices for trade within the EU. All companies will need to adapt to this practice when engaging in cross-border trade across European national borders. If a member state wishes to introduce mandatory use of e-invoices, EU approval will no longer be required. The requirement for a customer to “accept” electronic invoices will be removed. Additional requirements for payment data in electronic invoices will be introduced.

STATUS AND RUMORS AS OF JUNE 2023

There are many rumors about the ViDA directive proposal, and the fact is that the proposal has not been approved in the European Parliament yet. It is currently under active debate, and member states have generally shown a positive attitude towards ViDA. However, several member states have expressed concerns about the mandatory implementation starting in 2028 and about EU intervention in member states’ handling of domestic digital VAT reporting.

At present, no member countries have announced their stance on the implementation of ViDA as they await the final approved legislation.

MYSUPPLY IS FOLLOWING THE TRENDS

mySupply is closely monitoring the ViDA debate, and like many others in the world of electronic commerce, we are eagerly awaiting the outcome of the legislation. We are aware that this will have implications for businesses in Europe, especially multinational companies that will need to meet increasing requirements for electronic invoicing and VAT reporting across European member states.

We are working intensively to integrate the legislation, formats, and document exchange into VAX 360, so that both existing and new customers can comply with the upcoming requirements for e-invoicing and VAT reporting.

We will also strive to provide more articles on ViDA as the proposal is finalized and as member states express their plans for implementing ViDA in their respective legislation.

If you would like to learn more about ViDA or European e-invoicing, please feel free to contact our compliance department at peppol@mysupply.dk. We are here to answer your questions.

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