EU VAT reform ViDA: What online retailers need to know now

The Council of the European Union and its finance ministers have now agreed on the comprehensive reform of VAT at a meeting in Brussels on March 11, 2025. The legislative package "VAT in the Digital Age", or ViDA for short, which has already been the subject of much discussion, will come into force from 2027 and will bring far-reaching changes for online retailers. The reform intends to require every cross-border transaction to be reported digitally in real time from 2030 in order to adapt the VAT system to the challenges of the digital economy, combat fraud and simplify digital trade. We have summarized what online retailers can now expect and what needs to be considered.

The most important changes at a glance - what you should know

The EU's ViDA Directive covers three main areas: These include the complete digitization of VAT reporting obligations and thus the Digital VAT declaration (VAT) for European businesses, new reporting obligations for traders and new obligations in the VAT process for platform operators. We will cover all three areas below and provide an overview of the most important changes in each case:

• To the digital VAT returnFrom 2027, a digital real-time reporting system will be introduced for VAT purposes. This means that businesses will have to issue electronic invoices for cross-border transactions and automatically report this data to their tax administration. The national tax authorities will exchange this data via a new IT system to identify suspicious transactions. The system should be operational by 2030 and interoperable with national systems by 2035.
• About the new reporting obligationsThe invoice must be reported electronically at the time of issue via a portal yet to be created. This also applies to information on the monitoring of payment flows. Recipients of invoices are also obliged to report them within five days of receipt in order to enable data reconciliation by the tax authorities. The recapitulative statement will be replaced by the new digital reporting portal (DMP). In addition, the previous consignment stock regulation will be abolished from July 1, 2028 or July 1, 2029 at the latest.
• On VAT for the platform economyPlatform operators will in future be jointly responsible for the collection and payment of VAT if their service providers do not pay the VAT themselves. This concerns in particular online providers of short-term rentals and passenger transportation. However, Member States retain flexibility in the definition of short-term rental and can also exempt SMEs from these rules.

Important for online retailersInput tax deduction is to be dependent on an e-invoice in future. From July 1, 2028, an e-invoice must be issued within 15 days of the end of the month in which the service was provided. From July 1, 2030, this period will even be reduced to ten days after the service has been provided or a down payment has been received.

Other important changes at a glance

The scope of the one-stop store (OSS) will be extended to cover as many sales as possible within another member state. This should make it easier for businesses to fulfill their VAT obligations via a single online portal. However, it should be noted that in many cases, registration in other member states will still be required, as certain sales cannot be reported via the new OSS.

When the ViDA Directive comes into force, the EU's approval requirement for the early introduction of e-invoicing in the individual member states will also no longer apply.

Implications for online retailers

The ViDA reform has far-reaching implications for online retailers. You can see the most important ones below:

• Increased administrative expensesThe introduction of digital VAT reporting and the new reporting obligations mean a considerable amount of extra work for online retailers. This includes adapting your systems and processes to the new requirements in order to be able to issue electronic invoices and report the data on time.
• Investments in IT systemsOnline retailers may have to invest in new IT systems to ensure electronic invoicing and data transmission to the tax authorities.
• Changes in the business modelFor online platforms and traders who use platforms, the shift of VAT responsibility to platform operators may result in changes to their usual business model.
• Simplifications through OSSThe extension of the OSS can simplify VAT processing in cross-border trade for some online traders, but it should be noted that not all transactions can be processed via the OSS.

Conclusion

The ViDA reform is an important step towards modernizing the VAT system in the EU. Online traders should familiarize themselves with the changes in the ViDA Directive and adapt their systems and business processes at an early stage. A review of existing accounting and invoicing systems for compatibility with electronic invoicing and the new reporting obligations makes sense in any case. You should also check to what extent the expansion of the OSS will simplify VAT processing in cross-border trade for you. If necessary, however, you should always seek advice from tax advisors or other experts in order to understand the impact of the ViDA Directive on your business and to be able to take the necessary measures at an early stage.