ViDA: Digitalisation of VAT as a Key Step Towards Modernising the Tax System

On 11 March 2025, the Council of the European Union adopted the legislative package “VAT in the Digital Age” (ViDA), which introduces significant changes to VAT administration. It responds to the development of digitalisation, aiming to create a more efficient VAT system and reduce tax fraud. The main areas of focus include electronic invoicing (e-invoicing), single VAT registration, and the taxation of digital platforms.

Key changes under the ViDA Directive:

Mandatory electronic invoicing (e-invoicing)

• As of 2025, Member States may introduce mandatory e-invoicing for domestic transactions.
• From 1 July 2030, e-invoicing will become mandatory for cross-border B2B transactions within the EU.
• Invoices must comply with the European standard and will be automatically transmitted to tax authorities in real time.
• The EC Sales List will be abolished.

Extension of the One Stop Shop (OSS)

• From 1 January 2027, the OSS scheme will be extended to cover supplies of electricity, gas, heating, and cooling.
• As of 1 July 2028, the call-off stock simplification will be abolished and replaced by the extended OSS.
• The OSS regime will also apply to domestic supplies to final customers where the supplier is not established in the respective Member State.

Taxation of digital platforms

• From 1 July 2028, digital platforms facilitating short-term accommodation or passenger transport (e.g., Airbnb, Uber, eBay) will be considered “deemed suppliers” and may collect and remit VAT on behalf of their users.
• From 1 January 2030, this regime will become mandatory, although Member States will retain the possibility to define specific exceptions or scope.

Reverse charge for non-established suppliers

• The reverse charge mechanism will apply where the supplier is neither established nor registered for VAT in the Member State where the VAT is due.

Harmonization of rules by 2035

• From 1 January 2035, a unified e-invoicing framework will apply to both domestic and cross-border B2B transactions.
• This final stage is expected to achieve full digitalisation of VAT systems across the EU.

Current implementation status in the Czech Republic

The Czech Republic has not yet implemented mandatory electronic invoicing, except for public procurement. According to representatives of the Financial Administration, voluntary early adoption of ViDA before the official deadlines is not expected.

What does ViDA mean for businesses and tax authorities?

• Less administrative burden – The extended OSS will reduce the need for multiple VAT registrations across Member States.
• More effective tax collection – Digitalisation and real-time reporting will allow for quicker detection of VAT fraud.
• Level playing field for digital platforms – Online intermediaries will be taxed similarly to traditional businesses.
• Reduction of VAT evasion– Stricter rules and greater transparency in transaction reporting will enhance compliance.