On 11 March 2025, during the meeting of the Economic and Financial Affairs Council (ECOFIN), the European Union gave the green light to the VAT in the Digital Age package, also known as the ViDA project (VAT in the digital age). This reform can be regarded as one of the most significant developments in recent years in the areas of VAT, tax digitalisation and the harmonisation of electronic invoicing in Europe.
The approved package is intended to modernise the EU's value-added tax (VAT) system, strengthen the fight against tax fraud, and adapt the EU framework to an increasingly digitalised environment. The primary pillars upon which this system is founded include digital reporting requirements, electronic invoicing, the platform economy and the evolution of the single VAT registration model.
The approval of the package signifies a pivotal moment; however, the true challenge lies in its subsequent implementation across the various Member States in terms of technical, operational and regulatory aspects.
Next steps for VAT in the digital age: implementation enters a new phase
Following the approval of the package, the European Commission has initiated the process of delineating the details of its roll-out through a work programme for 2026, which stipulates the primary activities planned to advance its implementation.
The development of implementing acts relating to the Digital Reporting Requirements (DRR), the evolution of the future central VIES, the drafting of new explanatory notes, and the publication of technical documentation to facilitate the application of the package by Member States and businesses are key milestones.
The roadmap delineates a continuous schedule of technical work for 2026 and early 2027, incorporating consultations with tax authorities, expert groups and business stakeholders, in addition to specific support for Member States in their implementation process. The Commission itself states that the work programme updates and complements the implementation strategy published in September 2025.
In this context, the challenge for businesses is no longer merely to understand the scope of the package, but to anticipate how it will affect their invoicing systems, their reporting processes and their ability to operate in different markets with increasingly digitised and harmonised requirements.
Adoption of the ViDA project in Spain
The approval of ViDA at European level coincides with a particularly significant moment for Spain, where electronic invoicing and digital tax control have taken a step forward with the publication of the draft Ministerial Order that will regulate the public electronic invoicing solution and set out its technical and operational requirements.
The congruence between European developments and national progress is compelling numerous organisations to contemplate beyond immediate compliance and undertake a review of their methodologies for the preparation, exchange and reporting of tax information.
In practice, this process will require companies to pay closer attention to the integration between their invoicing systems, their reporting processes and their ability to respond to regulatory frameworks. These frameworks, although different, are moving towards the same logic: greater traceability, greater digitisation and greater harmonisation of information.
Yolanda Cano, who is a partner at BLN Palao Abogados and a specialist in electronic invoicing, provided us with the key insights into the ViDA project and its influence on the implementation of electronic invoicing.
The parliamentary process will remain ongoing, and all technical details will be finalised throughout this process. It is therefore advisable for companies to initiate a review of their invoicing systems, ERPs and procedures with a view to adapting to the VAT timetable in the digital age. In such circumstances, the presence of SERES is of paramount importance in facilitating a seamless transition.
What is ViDA project?
The ViDA project has its origins in a proposal published by the European Commission on 8 December 2022, which constituted a part of a broader strategy to modernise the Value Added Tax (VAT) system and render it more fraud-resistant. This proposal is, in turn, informed by the 2020 VAT Action Plan, which had already underscored the necessity to adapt the European tax framework to the digital economy.
The objective of ViDA is to construct a contemporary and effective Value Added Tax (VAT) system that is capable of responding to novel methods of operation, exchange of goods and services, and reporting of tax information in real time. The initiative is structured around three main pillars, the purpose of which is to reform key aspects of VAT within the European Union.
Key dates for VAT in the digital age
In July 2028, the introduction of the single VAT register will be implemented. The third pillar of the ViDA project will be grounded in the One-Stop-Shop model.
Regulations pertaining to the platform economy are scheduled to come into force in January 2030, with a voluntary phase for Pillar 2 to be implemented from July 2028.
It is evident that Pillar 1, the digital reporting system based on electronic invoicing, will be implemented in July 2030. The harmonisation of electronic invoicing schemes across Europe is not anticipated until 2035.
The recent approval by ECOFIN of the VAT proposals for the digital age will now require the approval and ratification of these proposals by the European Commission.
The cornerstones of VAT in the digital age
Digital reporting requirements and harmonisation of e-invoicing
The proposal that appears in VAT in the Digital Age requires the issuance of electronic invoices for intra-Community transactions that comply with European standards, which includes the establishment of a new definition of the electronic invoice standard EN 16931 (scheduled for July 2025).
In addition, in July 2030, digital information requirements will be introduced, a digital system similar to the SII, which will include near real-time reporting of transactions.
These changes aim to digitise invoicing processes to simplify VAT compliance and reduce fraud. Mandatory electronic invoicing and digital reporting requirements will facilitate the traceability of transactions and improve control of VAT collection.
Other formats, such as paper, will be allowed to continue for other transactions, such as domestic supplies, while hybrid formats, such as Germany's ZUGFeRD, will be valid if they contain the required data structure. Indeed, electronic invoices will replace paper invoices for legal purposes, except in limited circumstances.
Several points of the original proposal have also been amended, such as the reporting period after the issue of an e-invoice, which has been changed from "2 working days" to "10 days". Another example is that additional information such as bank details will be required to enable authorities to trace payments.
The EC will be responsible for monitoring and maintaining a new central database, known as Central VIES, which will contain all the above-mentioned transactions in order to verify that intra-EU transactions are declared with their VAT number, thus reducing the risk of fraud. In this way, the traditional VIES will disappear in 2032.
Member States that have introduced a national real-time reporting system after 1 January 2024 will have to harmonise with the EU's digital age VAT e-invoicing standard.
The final step for VAT in the digital age is the co-ordination of all national e-invoicing systems with the ViDA standard. This was originally scheduled for 2027, but has been postponed to January 2035.
The platform economy
Despite the initial plan to implement the collection of value-added tax (VAT) for transport and shared accommodation platforms in July 2027, this has been postponed to July 2028. This is due to the introduction of a voluntary phase, which will commence at the aforementioned date.
Nevertheless, the following will be excluded for a period of ten years:
- Those who provide platforms with a VAT identification number, thereby enabling them to continue to recover input VAT against output VAT.
- Those utilising the recently introduced special VAT registration scheme for small businesses (SMEs), which was implemented in 2025.
Conversely, the length of the short-term period has been reduced from 45 to 30 days. Furthermore, Member States are permitted to impose additional conditions in their regulations to qualify this novel definition.
Single VAT registration
From 1 July 2028, organisations engaged in e-commerce and B2B activities will be able to reduce their foreign VAT registrations and associated expenses. In other words, as of this date, Pillar 3 of VAT in the digital age will become mandatory.
Consequently, any business will be able to register in a single European country and fulfi its VAT obligations via a single online portal.
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