ViDA is part of the EU’s broader digitalization strategy and is closely linked to the introduction of mandatory e-invoicing in Germany in 2025.
So far, the ViDA initiative has presented a legislative proposal. Its aim is to increase the fraud protection of the respective national VAT systems through a standardized reporting system, especially for cross-border transactions within the European Union.
What is the EU VAT reform about?
rates or types of tax. Rather, it is about modernizing the VAT collection processes for transactions in the EU internal market. The following three components are at the heart of the EU reform:
- Real-time reporting of EU-wide B2B sales through Digital Reporting Requirements (DRRs), i.e. reporting platforms at national level
- Introduction: mandatory e-invoicing for intra-Community supplies
- Extended obligations for platform operators in e-commerce
The aim of ViDA is to enable greater transparency, less tax fraud and more efficient administration without changing the basic VAT system. ViDA primarily controls how and when VAT data has to be transmitted – not how much tax has to be paid.
What specific measures does ViDA include?
Specifically, the ViDA initiative focuses on three central elements:
- the introduction of an EU-wide digital reporting system for B2B sales (Digital Reporting Requirements), which should function in near real time
- EU VAT registration (“Single VAT Registration”): In future, companies should only have to register for VAT in one EU member state – even if they generate sales in several countries.
- the mandatory use of structured electronic invoices (XRechnung/ZUGFeRD) for intra-Community deliveries
Who is affected by ViDA?
The EU reform of VAT collection affects not only large corporations, but also medium-sized companies that operate across borders within the EU. The focus is on:
- Supplying and performing companies in the B2B sector that process intra-Community transactions
- Platform operators (e.g. ebay, amazon) in e-commerce that mediate transactions between third parties – for example in the sale of goods or digital services
The latter should also make an active contribution to the correct and transparent collection of VAT in future – especially for EU-wide transactions.
Timetable and implementation of ViDA
The ViDA initiative is currently in the EU legislative process. The EU Commission’s legislative proposal has been available since the end of 2022. It will be implemented gradually – with different deadlines for the individual measures.
Planned timeframe (status: 2025):
- 2022-2024: Coordination at EU level and national preparations
- From 2025: Introduction of mandatory e-invoicing in several member states and already provided for by law in Germany
- From 2028: Expected start of mandatory real-time reporting of cross-border B2B sales (Digital Reporting Requirements)
The exact deadlines depend on the final adoption of the EU directive and its transposition into national law. Companies should prepare for technical and organizational adjustments at an early stage – particularly with regard to invoice formats, ERP systems and reporting processes.
The EU Commission’s legislative proposal and the ViDA initiative’s overview page provide an overview of the current status.
FAQ on VAT in the digital age
Which companies need to deal with ViDA?
ViDA affects all companies that are active in the B2B sector within the EU and across national borders – regardless of their size. Platform operators in e-commerce that broker transactions between third parties are also affected.
What is ViDA in simple terms?
ViDA stands for “VAT in the Digital Age” – an EU initiative to modernize VAT collection. The aim is to collect VAT data for cross-border transactions digitally, standardized and almost in real time.
What is the difference between ViDA and the e-invoicing obligation in Germany?
The e-invoicing obligation in Germany will apply to domestic B2B transactions from 2025. ViDA goes beyond this: it applies to EU-wide transactions and supplements the national obligation with a digital reporting system and central VAT registration.
What does “Single VAT Registration” actually mean for companies?
With the Single VAT Registration, a single VAT registration in one EU member state will be sufficient in future – even if a company generates sales in several countries. This will reduce administrative work and multiple registrations.
What are Digital Reporting Requirements (DRRs)?
The Digital Reporting Requirements (DRRs) are a central element of ViDA. They oblige companies to report cross-border B2B sales digitally to national tax authorities almost in real time – in a standardized and automated manner.
Which invoice formats are permitted under ViDA?
ViDA relies on structured electronic invoices in accordance with European standard EN 16931. In Germany, these are primarily XRechnung and ZUGFeRD. These formats enable automated processing and are a prerequisite for digital VAT collection. A simple PDF invoice is no longer sufficient. Read more about these e-invoice formats in the linked article.
How can companies prepare for ViDA?
Even if many details are still being fine-tuned: Companies should align their ERP systems, invoice processes and data formats with digital reporting obligations and structured e-invoices at an early stage.