On 8 December 2022, the European Commission published a set of initiatives aimed at controlling and modernising the VAT system and preventing tax evasion. This package of measures is known as the ViDA (VAT in the Digital Age) project, an action plan that will help make VAT more resistant to fraud by embracing and promoting digitalisation.
Another objective is to address and promote the development of the platform economy, which can be defined as an activity based on the collaboration of communities of contributors who can share common resources through digital platforms.
ViDA, which originates from the Commission's July 2020 Action Plan, is based on 3 pillars necessary to establish this package of proposals:
- A new real time digital reporting system based on e-invoicing in order to provide valuable information to bussinesses. It is estimated that EU member States lost around 93 billion in VAT revenue in 2020 and, according to the VAT Gap report, a quarter of this is attributed to tax evasion. As a result, under this new system, Member States Will recoup to 11 € billion per year in lost VAT revenue over the next 10 years and Businesses will save 4.1 € billion per year in compliance costs over the next 10 years.
- Updated VAT rules for the platform economy. Platform economy operators in these sectors will be responsible for collecting and remitting VAT to the tax authorities where their suppliers do not. This will ensure a uniform approach, introduce a more level playing field and simplify life for SMEs.
- A single VAT registration. Based on the One Stop Shop (OSS) model, which simplifies the formal VAT obligations for any business, self-employed person or professional supplying services to end consumers in all EU Member States, these measures would allow them to register in a single Member State for all the services they supply and to fulfil their VAT obligations through a single online portal.