The European Parliament formally adopted the legislative package, “VAT in the Digital Age” or ViDA,” on 11 March 2025, marking a significant step towards modernising VAT rules in the EU and leveraging digital transformation. One of the core pillars of ViDA is the introduction of mandatory e-invoicing and digital reporting for cross-border transactions, which come into effect on 1 July 2030, with the option for member states to introduce e-invoicing and digital reporting for domestic transactions before, on or after that date. These changes aim to enhance data quality, improve tax compliance and reduce VAT fraud throughout the EU.
As from 1 July 2030, businesses involved in cross-border transactions within the EU will be required to issue e-invoices in a structured electronic format that enables automatic processing. These invoices must comply with the European standard for electronic invoicing (i.e., the EU format).
Alongside e-invoicing, near real-time digital reporting of transaction-level data by both suppliers and recipients to tax authorities will become mandatory. This data will be shared among EU tax administrations via a central VIES system, facilitating cross-checks and fraud detection.
EU member states may also introduce e-invoicing and digital reporting for domestic transactions, with some member states allowed transitional periods until 2035. The new rules are designed to harmonise requirements, reduce fragmentation and VAT fraud, and ultimately lower compliance costs for businesses operating in multiple EU countries.
Adapting to these new requirements may give rise to practical challenges for businesses:
To manage compliance and mitigate risks, businesses should consider the following strategic actions:
While the transition to e-invoicing and digital reporting poses challenges, it also offers significant opportunities:
The ViDA package represents a transformative shift in the EU VAT landscape. While the road to compliance may be complex, proactive planning and investment in digital solutions will position businesses to not only meet regulatory requirements but also unlock new efficiencies and value.
Madeleine Merkx
Hendy van Hoof
BDO in Netherlands
New E-Invoicing and Digital Reporting Requirements
As from 1 July 2030, businesses involved in cross-border transactions within the EU will be required to issue e-invoices in a structured electronic format that enables automatic processing. These invoices must comply with the European standard for electronic invoicing (i.e., the EU format).Alongside e-invoicing, near real-time digital reporting of transaction-level data by both suppliers and recipients to tax authorities will become mandatory. This data will be shared among EU tax administrations via a central VIES system, facilitating cross-checks and fraud detection.
EU member states may also introduce e-invoicing and digital reporting for domestic transactions, with some member states allowed transitional periods until 2035. The new rules are designed to harmonise requirements, reduce fragmentation and VAT fraud, and ultimately lower compliance costs for businesses operating in multiple EU countries.
Practical Challenges
Adapting to these new requirements may give rise to practical challenges for businesses:
- System Readiness: Many companies will need to upgrade or replace their invoicing and ERP systems to support structured e-invoicing and automated reporting. Current systems may not be compatible with the EU format or real-time data transmission.
- Data Quality and Timeliness: The obligation to issue e-invoices and report data within 10 days of the taxable event (or within five days of the receipt of the invoice in the case of reporting by the customer) requires robust internal processes and high data accuracy.
- Process Integration: E-invoicing and digital reporting must be seamlessly integrated into existing workflows, including procurement, sales and finance. This may require significant process redesign and staff training.
- Cross-Border Complexity: Businesses operating in multiple member states may need to navigate different national approaches, especially during the transition period, and ensure compliance with both EU and local requirements.
- Supplier and Customer Readiness: The new rules may require coordination with suppliers and customers, particularly regarding the acceptance and processing of e-invoices in the EU format.
Strategic Considerations for Compliance and Risk Management
To manage compliance and mitigate risks, businesses should consider the following strategic actions:
- Early Assessment: Conduct a gap analysis of current invoicing and reporting capabilities versus future requirements. Identify necessary system upgrades and process changes.
- Stakeholder Engagement: Involve IT, tax, finance and business units early in the planning process to ensure alignment and buy-in.
- Vendor Selection: Evaluate technology vendors and service providers for e-invoicing and reporting solutions that are scalable, secure and compliant with EU standards.
- Change Management: Develop a comprehensive change management plan, including staff training, communication and support.
- Monitoring and Controls: Implement controls to ensure timely and accurate data submission and monitor regulatory developments for further changes or clarifications.
Opportunities to Streamline Processes and Leverage Technology
While the transition to e-invoicing and digital reporting poses challenges, it also offers significant opportunities:
- Process Automation: Automating invoicing and reporting processes can reduce manual effort, minimise errors and accelerate cash flow.
- Data Analytics: Access to structured, real-time data enables better business insights, improved forecasting and enhanced decision-making.
- Cost Savings: Harmonised requirements and digital processes can lower compliance costs in the long run, especially for businesses active in multiple EU member states.
- Fraud Prevention: Enhanced transparency and cross-border data sharing strengthen the fight against VAT fraud, benefiting compliant businesses.
- Competitive Advantage: Early adopters of digital solutions may gain a competitive edge through increased efficiency and responsiveness.
Conclusion
The ViDA package represents a transformative shift in the EU VAT landscape. While the road to compliance may be complex, proactive planning and investment in digital solutions will position businesses to not only meet regulatory requirements but also unlock new efficiencies and value.Madeleine Merkx
Hendy van Hoof
BDO in Netherlands