VAT in the digital age (VIDA)

Abstract

On December 8, 2022, the European Commission put forth a set of proposals known as «VAT in the digital age (VIDA)» to modernize the EU VAT system. The aim is to enhance the efficiency of the EU VAT structure for businesses while also bolstering its resilience against fraudulent activities through the promotion of digitization. The proposed directive encompasses three main focal points («pillars»):

1. The expansion of electronic invoicing and the introduction of obligations related to digital reporting.
2. The introduction of a concept centered around a single VAT registration to streamline the process and mitigate the need for multiple local registrations within member states.
3. The extension of the deemed supplier rule for online marketplaces engaged in short-term accommodation rentals or the provision of passenger transport services.

Taxpayers should be aware of these rules to start preparing for the radical changes that will occur in terms of VAT in the coming years.